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Economic environment a firm expects to operate in over the life of the financial plan.
Economic defeasance
See: in-substance defeasance.
Economic dependence
Exists when the costs and/or revenues of one project depend on those of another.
Economic earnings
The real flow of cash that a firm could pay out forever in the absence of any change in the firms productive
capacity.
Economic exposure
The extent to which the value of the firm will change because of an exchange rate change.
Economic income
Cash flow plus change in present value.
Economic order quantity (EOQ)
The order quantity that minimizes total inventory costs.
Economic rents
Profits in excess of the competitive level.
Economic risk
In project financing, the risk that the projects output will not be salable at a price that will cover the projects
operating and maintenance costs and its debt service requirements.
Economic surplus
For any entity, the difference between the market value of all its assets and the market value of its liabilities.
Economic union
An agreement between two or more countries that allows the free movement of capital, labor, all goods and
services, and involves the harmonization and unification of social, fiscal, and monetary policies.
Economies of scale
The decrease in the marginal cost of production as a firms scale of operations increases.
Economies of scope
Scope economies exist whenever the same investment can support multiple profitable activities less
expensively in combination than separately.
ECU
See: European Currency Unit
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