Question

Please Define and Provide examples

1.return on equity

2.return on investment

3.economies of scope

4.business profit versus

5.economic profit

6.independent versus

7.dependent variables

8.parameters & determinants

9.comparative static analysis

10.dynamic analysis

Answer 1

Returns non Equity (ROE) is the measure of company's annural retum Cnet income) divided by the value of its total shareholders equity, exprened as percentage. e.g. A firm with an RoE of 10% means that they genercete profit of Rs. 10 for every pr. 100 of equity. it owns. 2. Return on investment is a ratio between net psotit and net cost of investment. ROI is a penormance measure wed to evaluate the ebriciency of an investment or compare the efficiency of a number of difte at investment eg. If you invested $100 in a share of stock and its value rises to $110 by the end of the biscal year the ROI is healthy 10% assuming no clividendo were paid. 3. 'Economies of scoperis' an economic concept theet the unit cost to produce a product will decline as the variety of poroduct incremenilie. He more cli6terent-but similar goods you produce the lower the total cost to pouduce each one e.g. lers say that you are shoemanufacturer. you produce men's and womens sneators: Adding a children's line ob shealcors would increme economies of scope became you can we the same poodactic equipment, supplies, storage and distribution channel to make a new line of products. That will turther reduce the your shoes. all cost of production on CS scanned with CamScanner

☺ Business profit us @economi poo tiit Accounti ng paisit is the monetizy costs a torm pays out and the seronue a firm receives. Accounting probit =totel maretary serenue toteel cost. @ Economic profit is the monetary costs and opportunity casts a firm pays and the rerence a firm receives. Economic profit = toteed rerenu-(explict cost timpricircosts eig. Ib a company had $250000 in verenue and fiorow in explicit cost its accounting poo bit would be $100000. The seine com pary also had $50,000 in implicit on opportunity costs. It's ecmomic profit would be $50000. 0 Independent variable Tuvalues that can be changed or contoulled in a given mode' or equation. They provide the input' curch ºs modified by the model to change the 'ocutput: e.g. whether someone lives in a city or a suburb. © Dependent variable. The values that result from the independent variable. Distance walced weight., dependent variable is depresion symptoms wich elepena, on inapendent variable parameters determinant.. parameters is a limit that affects how something can be done parameter is any summary number, like an arerage ao percentage es. The population comprise all likely American voters, and the is po e.ge and parameter CS Scanned with CamScanner

een. 343 determinant. The result of multiplying out, fren simplifying the elements of a determinant is a eg. saring and investment theory theory of interest, effect of time element in price determination etc. are 3 Determinant is an element that identities determines or that live or condition an outcome. OY the nature of something single number. Ca scalar quantity). ☺ comparative static analysis. Is a method of analysing the impact of chang in the parameter of a model by comparing the equilibrium that resues from the change with the original equilibrium e.g when the demand as well as the supply of onion is jokgs. price is are re. perkg. How suppose the demand increase to 6kgs. while supply remain te same. price of onions increas to Rs. 2 Perky. analysis. Dynamic analysis allo studies the procell by which. Equilibrium is achiered. athereas elynamic analysis studies both equilibrium and clsequilibrium Dynamic based on dynamic economics It investigates the effects in the equilibrium of celtem ative assumed values of initial conclitions. or other parameters. tinal CS Scanned with CamScanner