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Four Types of Earned Income
Transcript of Four Types of Earned Income
$100 * 0.04 = $4
So by the end of the year you own $104, including interest. Interest can either by charged by the day, month, year, etc. Profit is a financial gain that firms get. Profit is also known as the difference between the amount earned and the amount spent in buying, operating, or producing something. For example...
Julie had a lemonade stand to raise money for a class trip. She spent $8 on supplies and made $26. The profit would be $18. The amount spent ($8) would be subtracted from the total earnings ($26). Works Cited...
"Economic Rent." Investopedia. Web. 12 May 2011. <http://www.investopedia.com/terms/e/economicrent.asp>.
Kellaher, Karen. "Kid's Economic Glossary." Scholastic. 2 Feb. 2008. Web. 12 May 2011. <http://www2.scholastic.com/browse/article.jsp?id=3750579>.
"Economics A-Z." The Economist. Web. 12 May 2011. <http://www.economist.com/research/economics/alphabetic.cfm?letter=P#profit>. Opportunity Cost n. the loss of potential gain from other alternatives when one alternative is chosen. Opportunity cost can be described as the cost of passing up the next best choice while making a decision. If one has a personal budget, the best way to weigh out opportunity cost is to deeply consider the alternative option. A common misconception about opportunity cost is that it is an actual expense; it is not. For example...
If a city decides to build a hospital on a plot of vacant land, they are foregoing the opportunity to build a shopping center or a sports complex. The alternative options then become the oppurtunity cost. However, when on a personal finance plan or budget, you may want to get the most out of your money. For example...
You only have $4 to buy ice cream from the ice cream man. You can either buy a fudge bar for $2 or a dish of chocolate ice cream for $4. In this situation, if you chose the chocolate ice cream, the opportunity cost would be two fudge bars. Another example would be...
Your budget for redecorating your kitchen is $1,000. You can either choose to buy a new innovative stove for $1,000 or two convection ovens priced at $500 each. You choose to buy the two ovens. In this situation, the opportunity cost would be the fridge since you have foregone the opportunity to buy it. Works Cited...
"What Is Opportunity Cost?" InvestorWords.com. Web. 12 May 2011. <http://www.investorwords.com/3470/opportunity_cost.html>.
"Opportunity Cost." Kids.Net.Au. Web. 12 May 2011. <http://encyclopedia.kids.net.au/page/op/Opportunity_cost>.
Gad, Sham. "The Opportunity Cost of Investing: A Simple Concept Gone Missing." Seeking Alpha. 2 Nov. 2010. Web. 12 May 2011. <http://seekingalpha.com/article/234166-the-opportunity-cost-of-investing-a-simple-concept-gone-missing>.