Economics

Diseconomies of Scale

Diseconomies of Scale

Diseconomies of Scale Definition: Diseconomies of scale lead the marginal cost of a product to increase as a company grows. This typically follows the law of diminishing returns, where the further increase in the size of output will result in an even greater increase in average cost. This concept.....

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Consumption tax and its Types

Consumption tax and its Types

Consumption tax A consumption tax is a tax on spending on goods and services. The tax base of such a tax is the money spent on consumption. Consumption taxes are usually indirect, such as a value-added tax. However, it can also be structured as a form of personal taxation, as a sales tax, or as [.....

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Types of Taxes

Types of Taxes

To tax is to impose a financial charge or another levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. A tax charged by a government on a product, income, or activity. In economics, taxes fall on wh.....

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Cost-Effectiveness Analysis

Cost-Effectiveness Analysis

Cost-Effectiveness Analysis Cost-effectiveness analysis (CEA) is a method of comparing the cost and effectiveness of two or more alternatives. CEA is an alternative to cost-benefit analysis (CBA). The technique compares the relative costs to the outcomes (effects) of two or more courses of action.....

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Cost-Benefit Analysis

Cost-Benefit Analysis

Cost-Benefit Analysis Cost-benefit analysis (CBA) can be explained as a procedure for estimating all costs involved and possible profits to be derived from a business opportunity or proposal. It is sometimes called benefit costs analysis (BCA). The goal of CBA is to determine which option returns.....

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Chainstore Paradox

Chainstore Paradox

Chainstore Paradox The chainstore paradox (or “chain-store paradox”) is a concept that purports to refute standard game theory reasoning. The chain store game is a simple game in an extensive form which produces an inconsistency between game theoretical reasoning and plausible human b.....

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About Nash Equilibrium

About Nash Equilibrium

About Nash Equilibrium Nash Equilibrium is a concept of game theory where the optimal outcome of a game is one where no player has an incentive to deviate from his chosen strategy after considering an opponent’s choice. The concept is named after the American Mathematician and Nobel winning.....

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About Bayesian Efficiency

About Bayesian Efficiency

About Bayesian Efficiency Bayesian efficiency addresses an appropriate economic definition of Pareto efficiency where there is incomplete information. Under Pareto efficiency, an allocation of a resource is Pareto efficient if there is no other allocation of that resource that makes no one worse .....

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About Pareto Efficiency

About Pareto Efficiency

About Pareto Efficiency Pareto efficiency (or Pareto optimality) is a quality of allocations in economics and game theory. If an allocation is Pareto efficient, no option can be made better off without making at least one other option worse off. The concept is named after Vilfredo Pareto (1848–.....

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About Allocative Efficiency

About Allocative Efficiency

About Allocative Efficiency Allocational efficiency is a characteristic of an efficient market in which capital is allocated in a way that is most beneficial to the parties involved. It is a state of the economy in which production represents consumer preferences; in particular, every good or ser.....

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About Agency Cost

About Agency Cost

About Agency Cost Agency costs are the costs of disagreement between shareholders and business managers, who may not agree on which actions are best for the business. Managers, instead, would prefer to expand the business and increase their salaries, which may not necessarily increase share value.....

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About Contract Theory

About Contract Theory

About Contract Theory Contract theory is an economic theory that entails how parties can develop a legal agreement in a situation that involves asymmetric information. Because of its connections with both agency and incentives, contract theory is often categorized within a field known as Law and .....

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