What Is the Marginal Rate of Substitution (MRS)? In economics, the marginal rate of substitution (MRS) is the amount of a good that a consumer is willing to consume compared to another good, as long as the new good is equally satisfying. MRS is used in indifference theory to analyze consumer behavior. When someone is indifferent to substituting
What Is the Marginal Rate of Transformation (MRT)? The marginal rate of transformation (MRT) is the number of units or amount of a good that must be forgone to create or attain one unit of another good. It is the number of units of good Y that will be foregone to produce an extra unit
What Is Marginal Analysis? Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. Companies use marginal analysis as a decision-making tool to help them maximize their potential profits. Marginal refers to the focus on the cost or benefit of the next unit
What Is a Magnetic Stripe Card? A magnetic stripe card is a type of pass that permits the user to complete electronic transactions or access a locked physical space. The “stripe” contains embedded information that identifies its user. Types of magnetic stripe cards currently in use include driver’s licenses, credit cards, employee ID cards, hotel
What Is a Main Home? Main home is a term the Internal Revenue Service (IRS) uses to indicate the home a taxpayer has lived in most of the time during a given taxation year or the only home a taxpayer owns. The classification of a taxpayer’s main home is important when considering gains resulting from selling a
What Is Maintenance Margin? Maintenance margin is the minimum equity an investor must hold in the margin account after the purchase has been made; it is currently set at 25% of the total value of the securities in a margin account as per Financial Industry Regulatory Authority (FINRA) requirements. Key Takeaways Maintenance margin is the
What Is a Majority Shareholder? A majority shareholder is a person or entity that owns and controls more than 50% of a company’s outstanding shares. As a majority shareholder, a person or operating entity has a significant amount of influence over the company, especially if their shares are voting shares. Voting shares give a shareholder permission
What Is a Make-or-Buy Decision? A make-or-buy decision is an act of choosing between manufacturing a product in-house or purchasing it from an external supplier. Also referred to as an outsourcing decision, a make-or-buy decision compares the costs and benefits associated with producing a necessary good or service internally to the costs and benefits involved
What Is Make to Order (MTO)? Make to order (MTO), or made to order, is a business production strategy that typically allows consumers to purchase products that are customized to their specifications. It is a manufacturing process in which the production of an item begins only after a confirmed customer order is received. It is
What Is Make to Stock (MTS)? Make to stock (MTS) is a traditional production strategy that is used by businesses to match inventory with anticipated consumer demand. Instead of setting a production level and then attempting to sell goods, a company using MTS would estimate how many orders its products could generate, and then supply
