Economics And Business

Front 1

Tobin's q

Back 1

compares the value of a company given by financial markets with the value of a company's assets. It was developed by James Tobin (Tobin 1969). It is calculated by dividing the market value of a company by the replacement value of its assets:

____ = market value / asset value

Front 2

Economies of Scale

Back 2

refers to the decreased per unit cost as output increases. More clearly, the initial investment of capital is diffused (spread) over an increasing number of units of output, and therefore, the marginal cost of producing a good or service decreases as production increases

Front 3

economic rent

Back 3

is an analytic term employed to distinguish the difference between the income earned by an input or factor of production, and the cost of the factor of production. A factor of production can be put to various and alternative economic uses; the income earned by (or price paid for) a factor in its current use may be more than what is minimally necessary to draw the factor into its current use; The difference between the minimum amount of money putatively needed to get a Michael Jordan to play basketball at all, and the amount actually paid Michael Jordan to play for the Chicago Bulls, may be termed a ____.

Front 4

quasi-rent

Back 4

Returns to sunk cost investments in specialized capital equipment have some of the same qualities as land rent, in that, once the sunk cost investment in specialized equipment is made, the price necessary to bring the captital equipment into the use for which it was designed may be much less than would be necessary to repay the original cost of investment. The difference between the amount necessary to bring a sunk cost investment into productive use and the amount actually earned has been termed a _____

Front 5

market capitalization

Back 5

is a business term that refers to the aggregate value of a firm's outstanding common shares. In essence, ____ reflects the total value of a firm's equity currently available on the market

Front 6

Equity value

Back 6

is a market-based measure of the value of a firm. It accounts for all the ownership interest in a firm including the value of unexercised stock options and securities convertible to equity. ____ differs from market capitalization in that it incorporates all equity interests in a firm whereas market capitalization only reflects those common shares currently outstanding.