shoeleather costs

(noun)

The cost of time and effort that people spend trying to counter-act the effects of inflation.

Related Terms

Examples of shoeleather costs in the following topics:

  • The Costs of Inflation

    • The costs of inflation include menu costs, shoe leather costs, loss of purchasing power, and the redistribution of wealth.
    • In economics, a menu cost is the cost to a firm resulting from changing its prices.
    • The name stems from the cost of restaurants literally printing new menus, but economists use it to refer to the costs of changing nominal prices in general.
    • Shoeleather cost refers to the cost of time and effort that people spend trying to counteract the effects of inflation, such as holding less cash, investing in different currencies with lower levels of inflation, and having to make additional trips to the bank.
    • Other costs of high and/or unexpected inflation include the economic costs of hoarding and social unrest.

  • Average and Marginal Cost

    • Marginal cost is the change in total cost when another unit is produced; average cost is the total cost divided by the number of goods produced.
    • Marginal cost is not related to fixed costs.
    • When the average cost declines, the marginal cost is less than the average cost.
    • When the average cost increases, the marginal cost is greater than the average cost.
    • This graph is a cost curve that shows the average total cost, marginal cost, and marginal revenue.

  • Types of Costs

    • In economics, the total cost (TC) is the total economic cost of production.
    • It consists of variable costs and fixed costs.
    • Total cost is the total opportunity cost of each factor of production as part of its fixed or variable costs .
    • Variable costs are also the sum of marginal costs over all of the units produced (referred to as normal costs).
    • Economic cost is the sum of all the variable and fixed costs (also called accounting cost) plus opportunity costs.

  • Economic Costs

    • An example of economic cost would be the cost of attending college.
    • So, the economic cost of college is the accounting cost plus the opportunity cost.
    • So, the economic cost of college is the accounting cost plus the opportunity cost.
    • Total cost (TC): total cost equals total fixed cost plus total variable costs (TC = TFC + TVC) .
    • Variable cost (VC): the cost paid to the variable input.

  • Cost-Based Pricing

    • Cost-based pricing is the act of pricing based on what it costs a company to make a product.
    • Cost-based pricing is the act of pricing based on what it costs a company to make a product.
    • Price = (1+ Percent Markup)(Unit Variable Cost + Average FixedCost) .
    • A company must know its costs.
    • Cost-based pricing is misplaced in industries where there are high fixed costs and near-zero marginal costs.

  • The Cost of New Common Stock

    • The cost of new common stock is determined by adding flotation costs to the cost of current equity.
    • The cost of new equity is 15.3%.
    • The cost of external equity is higher than the cost of existing equity, or retained earnings.
    • Flotation costs include all costs of issuing the securities, such as banker's fees, legal fees, underwriting fees, filing costs, etc.
    • Flotation cost of 3%.

  • Cost of capital

    • The cost of capital refers to the cost of the money used to pay for the capital.
    • In order to determine a company's cost of capital, the cost of debt and the cost of equity must be calculated.
    • This determines the "market" cost of equity.
    • One way of combining the cost of debt and equity to generate a single cost of capital number is through the weighted-average cost of capital (WACC).
    • The cost of capital is the cost of the money used to finance the plant.

  • The Supply Curve in Perfect Competition

    • The total revenue-total cost perspective and the marginal revenue-marginal cost perspective are used to find profit maximizing quantities.
    • In economics, a cost curve is a graph that shows the costs of production as a function of total quantity produced.
    • In a free market economy, firms use cost curves to find the optimal point of production (minimizing cost).
    • There are two ways in which cost curves can be used to find profit maximizing quantities: the total revenue-total cost perspective and the marginal revenue-marginal cost perspective.
    • The total revenue-total cost perspective recognizes that profit is equal to the total revenue (TR) minus the total cost (TC).

  • Information Costs and Bond Prices

    • Information costs influence the bond prices and interest rates.
    • We include these costs in the bond's market price and interest rate, and they raise the cost of borrowing.
    • Investors pay a greater cost to acquire information for the high information cost bonds.
    • Thus, investors are attracted to the low-information cost bonds, boosting their demand for low information cost bonds, increasing the market price and decreasing market interest rate.
    • Therefore, low-information-cost bonds pay a lower interest rate.

  • Average Cost Method

    • Under the Average Cost Method, It is assumed that the cost of inventory is based on the average cost of the goods available for sale during the period.
    • There are two commonly used average cost methods: Simple Weighted Average Cost method and Moving-Average Cost method.
    • Moving-Average (Unit) Cost is a method of calculating Ending Inventory cost.
    • Each time, purchase costs are added to Beginning Inventory Cost to get Cost of Current Inventory.
    • The Weighted-Average Method of inventory costing is a means of costing ending inventory using a weighted-average unit cost.