Archives: Terms

Definition of Property Property refers to anything that can be owned by a person or entity. Ownership implies the legal right to possess, use, and dispose of something, whether tangible or intangible. Property can be classified into two broad categories: real property and personal property. Real property includes land and […]

Definition of Propensity to Save Propensity to save refers to the proportion of income that an individual or household saves rather than consumes. There are two key concepts within this term: Average Propensity to Save (APS): This is the ratio of total savings to total disposable income. It indicates what […]

Definition of Propensity to Consume Propensity to consume, often referred to as the Marginal Propensity to Consume (MPC), is an economic term that indicates the proportion of additional income that an individual or household spends on consumption rather than saving. This concept is vital in understanding consumer behavior and can […]

Definition of Prohibitive Tariff A prohibitive tariff is a tax on imports so high that it effectively discourages or entirely prevents foreign trade. This kind of tariff is designed to be so costly that importing the goods becomes nonviable economically, leading to a significant drop or complete halt in import […]

Definition of Profit-Taking Profit-taking refers to the practice of selling an asset, such as stocks, bonds, or commodities, to lock in gains after it has appreciated in value. This financial strategy is utilized by investors to realize (or “take”) the profits from their investments before the price of the asset […]

Definition of Profit-Sharing Arrangement A profit-sharing arrangement is a system where an organization distributes a portion of its profits to its employees. This mechanism aims to align the interests of employees with those of the company, motivating them to perform better and contribute to the overall success of the organization. […]

Definition of Profit-Sharing Profit-Sharing is a strategy used by businesses to distribute a portion of their profits to their employees. This distribution can be in the form of direct cash payments, stock options, or profit-sharing bonuses. The primary goal of profit-sharing plans is to align the interests of employees with […]

### Title: Profit-Related Pay Definition of Profit-Related Pay Profit-related pay, also known as profit-sharing, is a financial incentive mechanism where employees receive compensation that is directly tied to the profitability of the company. This means that part of the employees’ earnings is dependent on the company achieving certain profit targets. […]

Definition of Profit and Loss Account A Profit and Loss account, often abbreviated as P&L and also known as an income statement, is a financial document that summarizes the revenues, costs, and expenses incurred during a specific period of time, usually a fiscal quarter or year. This document provides insights […]

Definition of Profit Maximization Profit maximization is the process by which a firm determines the price and output level that returns the greatest profit. This concept is based on the assumption that firms aim to achieve the highest possible financial return from their operations, taking into account constraints such as […]