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In any technical subject, words commonly used in everyday life acquire very specific technical meanings, and confusion can arise when someone is uncertain of the intended meaning of a word. This article explains the differences in meaning between some technical terms used in economics and the corresponding terms in everyday usage.
The differentiation between long-run and short-run economic models did not come into practice until 1890, with Alfred Marshall's publication of his work Principles of Economics. However, there is no hard and fast definition as to what is classified as "long" or "short" and mostly relies on the economic perspective being taken.
A time price is the amount of time a person needs to work to earn the amount of money necessary to buy a particular product or service. [1] For example, if a person makes $5.00 an hour and wants to buy a product that costs $20.00 then the time price will be 4 hours.
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
A short seller borrows stock from a broker and sells that into the market. Later the investor expects to repurchase the stock at a lower price, pocketing the difference between the sell and buy ...
Although the difference between the values and the times is the same, people value the two options at a different discount rate. The $1 is more heavily discounted between tomorrow and two days than it is between 100 and 101 days, meaning that people prefer the $10 option more in the two day case than in the 100 day case.
For example, $225K would be understood to mean $225,000, and $3.6K would be understood to mean $3,600. Multiple K's are not commonly used to represent larger numbers. In other words, it would look odd to use $1.2KK to represent $1,200,000. Ke – Is used as an abbreviation for Cost of Equity (COE).
Here are key differences between the two: Interest rate sensitivity: Long-term bonds are more sensitive to interest rate fluctuations than short-term bonds. That’s because the longer the ...