Question

Define, explain, illustrate as appropriate the following: ex ante vs ex post, wealth vs income, intermediate good vs final good, value added, and ceteris paribus.

Answer 1

Return is something receiving back Return is also called return on investment, is the amount of money you receive from an investment.

Ex - Ante return

• It is a latin word that means "before the event"
• It is the prediction of an event before it actually happens, and the actual outcome is uncertain
• Ex ante is the estimated return that investors can expect to earb from an investment or the earnings that a company can expect to earn at the end of a specific period

Ex-post return

• It is a latin word that means "after the event"
• It is represents the actual results attained by the company which is the return earned by the company which is the return earned by the companies.investors
• The investment company use the concept to forecast the expected returns of a security based on the actual or historical returns earned by the security

Wealth vs income

Wealth

• It is the stock of financial and real assets
• It is a measure of net worth
• It is measured by how much a person has in savings,cash , investments,and real estate
• Which is accumulated over a period of time
• examples of wealth.. Properties, shares, business, land, car, money in the bank

Income

• I t is the flow of cash or non-cash remuneration
• It is measured on yearly,monthly, or weekly
• It is generated immediately
• Types of income: Salaries, wages, rent, welfare, commissioms, interest, Capital gains, royalties, Profits

Intermediate good vs Final goods

Intermediate goods

• Goods with in boundary line of production
• It is a product used to produce a final good or finished product
• Not ready for use by end
• These goods are sold between industries for resale or the production of other goods

Final goods

• Crossed boundary line of production
• It is produced of consumed by the consumer to satisfy current wants or needs
• It is ready for use by the end user
• It is included in calculation of national income

Value added

• It is a measure of value added
• Economic value added is used to measure the value of a company generates from funds into it
• It is also known as economic profit
• If a company is not generating value from the funds invested into business, it means the companys EVA is negative

Ceteris paribus

• It is a Latin phrase, it means that 'with other things the same"
• It is also mean that "other things being equal or held constant"
• In the real business concept, its usually hard to isolate all the different variables that may change or influence the outcome of an individual might make a decision.
• for example, an increase in the price of tea will decrease the quantity demanded for tea.
• We often add the phrase or assume, all else constant , at the end