What Is the Law of Diminishing Marginal Returns? The law of diminishing marginal returns is a theory in economics that predicts that after some optimal level of capacity is reached, adding an additional factor of production will actually result in smaller increases in output. For example, a factory employs workers to manufacture its products, and
What Is the Law of Diminishing Marginal Utility? The law of diminishing marginal utility states that all else equal, as consumption increases, the marginal utility derived from each additional unit declines. Marginal utility is the incremental increase in utility that results from the consumption of one additional unit. “Utility” is an economic term used to
What Is the Law of Large Numbers? The law of large numbers, in probability and statistics, states that as a sample size grows, its mean gets closer to the average of the whole population. This is due to the sample being more representative of the population as the sample become larger. In a financial context
What Is the Law of Supply? The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa. The law of supply says that as the price of
What Is the Law of One Price? The law of one price is an economic concept that states that the price of an identical asset or commodity will have the same price globally, regardless of location, when certain factors are considered. The law of one price takes into account a frictionless market, where there are
Lawrence R. Klein was an American economist who won the Nobel Memorial Prize in Economic Sciences in 1980 for his work building statistical models, eventually dubbed the Wharton models, that more accurately forecast economic activity such as gross national product, exports, investment, and consumption. Key Takeaways Lawrence Klein was an American economist who won the
What Is a Layoff? A layoff is the temporary or permanent termination of employment by an employer for reasons unrelated to the employee’s performance. Employees may be laid off when companies aim to cut costs, due to a decline in demand for their products or services, seasonal closure, or during an economic downturn. When laid
What Was an L Bond? An L bond was a high-yielding debt instrument that financed the purchase of life insurance policies on the secondary market. A type of privately issued, alternative investment, L bonds were created by Dallas-based financial services firm GWG Holdings, which ceased selling them on April 16, 2021. Key Takeaways The L
What Is a Lead Bank? A lead bank is a bank that oversees the arrangement of loan syndication. The lead bank receives an additional fee for this service, which involves recruiting the syndicate members and negotiating the financing terms. In the Eurobond market, the lead bank acts in an agent capacity for an underwriting syndicate.
What Is Leadership? Leadership in business is the capacity of a company’s management to set and achieve challenging goals, take fast and decisive action when needed, outperform the competition, and inspire others to perform at the highest level they can. It can be difficult to place a value on leadership or other qualitative aspects of
