Economics

Definition: Hawley’s Risk Theory of Profit was propounded by F.B. Hawley, who believed that those who have the risk taking ability in the dynamic production have a sound claim on the reward, called as profit. Simply, profit is the price that society pays to assume the business risk. The risk in business may arise due to several factors, Viz. Obsolescence of a product, … [Read more...] about Hawley’s Risk Theory of Profit

Definition: Clark’s Dynamic Theory of Profit was propounded by J.B. Clark, who believed that profits arise in the dynamic economy and not in the static economy. The static economy is one in which the things do not change significantly or remains unchanged. Such as, the population and capital remain stationary, goods continue to be homogeneous, production process remains … [Read more...] about Clark’s Dynamic Theory of Profit

Definition: Walker’s Theory of Profit, also called as a Rent Theory of profit was propounded by F.A. Walker, who believed that profit is regarded as a rent of differential ability that an entrepreneur may possess over the others. Walker’s theory of profit works on the same principle as that of land rent, which is the difference between the yields of least and most effective … [Read more...] about Walker’s Theory of Profit

Definition: Profit is the financial benefit realized from the business activity when the revenues generated exceeds the costs and expenses incurred in the operation of such activities. Simply, the total cost deducted from total revenue yields profit. The profits of the organization depend on the successful management of business operations, i.e. how well an entrepreneur … [Read more...] about Theories of Profit

Definition: Profit refers to the financial gain obtained when the revenue generated from the business operations exceed the expenses and costs incurred in carrying out the business activity. The term “profit” imply different meanings to different people. Such as, profit is regarded as income to the equity holder, wages to the labor, rent to the owner, interest to the money … [Read more...] about Types of Profit

Definition: National Income refers to the monetary value of the entire volume of goods and services produced in the economy during a period of one year. Several measures of national income are used to estimate the nation’s total economic activities by totaling the value of all the goods and services produced in its economy over a period of time. All those human activities … [Read more...] about Measures of National Income

Definition: National Income refers to the money value of all the goods and services produced in a country during a financial year. In other words, the final outcome of all the economic activities of the nation during a period of one year, valued in terms of money is called as a National income. In the above definition, the economic activities include all the human activities … [Read more...] about National Income

Definition: The Peak Load Pricing is the pricing strategy wherein the high price is charged for the goods and services during times when their demand is at peak. In other words, the high price charged during the high demand period is called as the peak load pricing. This type of price discrimination is based on the efficiency, i.e. a firm discriminates on the basis of high … [Read more...] about Peak Load Pricing

Definition: The Transfer Pricing is a price charged for the goods and services supplied by one division to the other division of the same company. In other words, the price at which two or more divisions of the same enterprise transact with each other is called as Transfer Pricing. Often, the larger sized firms divide their production activities into different product … [Read more...] about Transfer Pricing

Definition: The Consumer Price Index or (CPI) measure the change in the price level of a basket of consumer goods and services. In other words, consumer price index is a measure that computes a weighted average of the prices of each item included in the commodity basket, such as food, clothing, furniture, drinks, etc. The basket of goods and services refers to the fixed list … [Read more...] about Consumer Price Index