What is the Marginal Rate of Technical Substitution (MRTS)? The marginal rate of technical substitution (MRTS) is the measure with which one input factor is reduced while the next factor is increased without changing the output. It is an economic illustration that explains the level at which one factor of input must decline. While maintaining…
What is the Marginal Propensity to Import (MPM)? The marginal propensity to import (MPM) is the proportion of change in the volume of imports due to a change in income. This concept holds that the proportion of foreign leakage will naturally increase with rising income. Foreign leakage refers to the money that leaves the domestic…
What is a Subprime Mortgage? A subprime mortgage is a type of debt instrument that is provided to individuals with a low credit score and whose chances of paying back the loan are lower than other individuals. The bank charges a higher rate of interest for taking such an additional risk. What is a Credit…
What is a Shell Corporation? A shell corporation is a business that is formed that has no actual business operations. They are mostly created for money laundering or sometimes for parking early startup funds. They do not employ anyone or provide any services. Shell corporations are created in tax havens to avoid paying taxes and…
What is the Securities and Exchange Board of India (SEBI)? The Securities and Exchange Board of India (SEBI) is a regulatory body that came into power in 1992 to protect the Indian securities market from fraudulent activities. It functions with the same objective as the Securities and Exchange Commission (SEC), its American counterpart. Creation of the…
What is a Joint Bond? A joint bond, also known as a joint-and-several bond, is a type of bond that involves an issuer and at least two guarantors. The purpose of including multiple guarantors in a bond agreement is for one of the guarantors to guarantee payment in the case that the other guarantor is…
What is Sampling? Sampling is the method of selecting a small section of a larger group in order to estimate the characteristics of the entire group. Obtaining information from a large data set can be time-consuming, so taking sample data can be quicker and provides similar results. For example, if a company wants to know…
What is the Marginal Tax Rate? The marginal tax rate is the rate charged on taxable income for every additional dollar earned. It is a federal tax system known as a progressive tax. The progressive tax system uses a structure in which individuals with higher taxable income pay more in taxes, while those in the…
What is Marginal Social Cost (MSC)? Marginal social cost (MSC) refers to the cost that society pays as a result of the production of additional units or utilization of a good or service. The total costs of producing an additional unit are not only undertaken by the producer but also by society. MSC examines the…
What is Marginal Revenue Product (MRP)? Marginal revenue product (MRP) explains the additional revenue generated by adding an extra unit of production resource. It is an important concept for determining the demand for inputs of production and examining the optimal quantity of a resource. It can be analyzed by aggregating the revenue earned by the…
