What is the Economy? The economy is the production, consumption, trade, and distribution of goods and services. Every economy is characterized by its own unique values, culture, education as well as legal and political systems. When referring to an economy, it is also important to consider supply and demand, as well as the labor and…
What is Econometrics? Econometrics is an area of economics where statistical and mathematical methods are used to analyze economic data. Individuals who are involved with econometrics are referred to as econometricians. Econometricians test economic theories and hypotheses by using statistical tools such as probability, statistical inference, regression analysis, frequency distributions, and more. After testing economic…
What is Cross Liability Coverage? Cross liability coverage is a feature of insurance contracts covering multiple customers represented in the form of a clause on commercial insurance policies. It allows each party to be seen and treated as if they own separate policies, thus allowing them to gain coverage in the event that a claim…
What is Incremental Cost? Incremental cost is the additional cost incurred by a company if it produces one extra unit of output. The additional cost comprises relevant costs that only change in line with the decision to produce extra units. Certain costs will be incurred whether there is an increase in production or not, which…
What is the Pareto Principle? The Pareto principle, also known as the 80/20 rule, was one of Vilfredo Pareto’s most noteworthy theories, which found that 80% of outcomes often come from 20% of the related inputs. Pareto was an Italian economist in the 19th and 20th centuries who helped develop modern economics as we know…
What is a Pareto Improvement? A Pareto improvement is a theory in neoclassical economics. It occurs in a situation where it is possible to make one party better off without negatively affecting another party, given the original allocation of goods. Pareto improvements can keep occurring until the Pareto optimum is reached, at which time no…
What is the Harami Cross? The harami cross is a candlestick pattern used in security trading. It is a large candlestick that follows or moves in the direction of the current trend associated with the stock, followed by a small Doji candlestick that is fully within the previous candlestick’s body length. The color (red, green,…
What is a Parent Company? A parent company is a company that owns more than 50% of the outstanding voting shares of another company. Therefore, it controls the other company or companies and can directly influence the business’ operations or take a more hands-off approach on ownership. A parent company typically actively manages its own…
