Management of Common Pool Resources
Political science professor Elinor Ostrom showed that common-pool resources, such as water supplies or fish, can be effectively managed collectively without government or private control.
But this is only possible if those using the resource are physically close to it and have a relationship with each other. They will self-police to ensure community rules are followed.
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This is a key concept in modern financial theory used for valuing European options and employee stock options.
Investors can use an online options calculator to get results by adding an option's strike price, the underlying stock's price, the option's time to expiration, its volatility, and the market's risk-free interest rate.
Robert Merton and Myron Scholes won the 1997 Nobel Prize in economics for the Black-Scholes theorem.
The economic theory of expected utility maximization says that people will act out of rational self-interest. But psychologist Daniel Kahneman showed that it is incorrect.
Some people think that gold has no intrinsic value and that gold's only worth is as a material to make jewellery. Others assert that gold is an asset with various intrinsic qualities that make it unique for investors to gather in their portfolios.
Adam Smith was an 18th-century Scottish economist, philosopher, and author. He is considered the father of modern economics.
The law of comparative advantage was first mentioned in 1817 by English economist David Ricardo.
A company has a comparative advantage when it is able to provide a good or service at a lower opportunity cost than others, helping it sell the same product at a lower cost, resulting in better margins.
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