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The stock market over the last month is up a little bit. The Dow is up roughly 513 points or about 1.9%. The quarter is about flat. The topic of this newsletter will be currency and inflation. Let’s start with … Continue reading
Tag Archives: Economics
Definition of Internal Rate of Return Internal Rate of Return is a way of determining the value of a project. It is simply the discount rate that makes the Future Value of a series of cash flows equal to the … Continue reading
Definition of Net Present Value Net Present Value is a way of determining the value of a project. It is simply the Present Value of a series of cash flows. Before we talk more about that, we should review the … Continue reading
Definition A barrier to entry as the name indicates is whatever factors that are in place that prevent some companies from entering an industry. The most common barrier to entry is cost. As mentioned in an earlier post, a company … Continue reading
Statement: Increased competition brings down consumer costs The statement is not necessarily true. What is true is that competition between suppliers will always apply downward pressure on consumer cost. In complete isolation, the statement is completely correct. However, in real life … Continue reading
Introduction Economically, a minimum wage is simply a price floor. The minimum wage employees are the suppliers of labor (they are selling their time) and the companies are the demanders of labor (they are buying that time). So we can … Continue reading
In Short Economics is the study of how people make decisions when in a state of scarcity. It is people choosing one option for another and the allocation of scarce resources. What is Scarcity? In life, people cannot get everything … Continue reading
What is the Forced Rider Problem? A forced rider is when someone is forced to pay for a good/service that they do not benefit from. The forced rider problem is that the good/service is thus overprovided. Assuming that other people don’t … Continue reading
What is the Free Rider Problem? A free rider is when someone enjoys the benefit of a good/service that they didn’t pay for. The free rider problem is that the good/service is thus underprovided. For if there is no penalty … Continue reading
Definition Moral hazard is when the risk/cost of an action is borne by someone other than the person doing the action. If a person receives all the benefit and none of the cost, they will engage in excessive risky behavior … Continue reading