What Is Functional Obsolescence? Functional obsolescence is when an asset becomes less useful because of an outdated design that cannot be readily renovated or modernized. It is the reduction of an object’s usefulness or desirability because of an outdated design feature that is difficult to change or update. The application […]
Economics
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What Is a Shadow Price? A Shadow Price is an assigned monetary value to an item, commodity, or service where the true value is unknown and can only be estimated. Shadow pricing is commonly used to establish a value for something that is not ordinarily bought and sold in any […]
What Is Cyclical Unemployment? Cyclical unemployment is a specific type of unemployment that results in temporary high unemployment rates. It is caused by a downturn in the business cycle with reduced demand for goods and labor. Cyclical unemployment is a component of overall or aggregate unemployment. It occurs naturally during […]
What Is Fair Market Value (FMV)? FMV or Fair Market Value is the price that a willing buyer will pay to a willing seller. It further assumes that both parties are knowledgeable and unrelated and neither is forced to make the deal. Fair market value (FMV) in real estate is […]
What is Base Rate Neglect? Base rate neglect refers to a tendency to rely more on specific information than actual probability and statistics when making judgments. Base rate neglect is an error in reasoning. Too little weight is placed on the base rate possibility or actual probability of an event […]
What Is the Spillover Effect? The spillover effect in economics refers to the effect on a country’s economy from unrelated events happening in another country. The effect refers to the impact that seemingly unrelated events in one nation can have on the economies of other nations. There are positive spillover […]