In economics, a trade-off is defined as an “opportunity cost.” For example, you might take a day off work to go to a concert, gaining the opportunity of seeing your favorite band, while losing a day’s wages as the cost for that opportunity.

For example, if I want to spend an hour sleeping, I cannot get it without giving up something else, such as an hour of studying. Society faces three key trade-offs: what goods and services to produce, how to produce them, and who gets the goods and services.

The definition of trade off is an exchange where you give up one thing in order to get something else that you also desire. An example of a trade off is when you have to put up with a half hour commute in order to make more money.

What is a trade-off? Give at least one example. A trade-off is an exchange in which one benefit is given up in order to obtain another. Example: a material may be used to build a house because it is attractive to customers even though it is not as durable.

What is another word for trade-off?

exchange	swap
trade	commutation
barter	dicker
truck	quid pro quo
back-and-forth	interchange

Trade-Offs Within Health Care The nature of the trade-offs at this level involves giving up some benefits to get other benefits, the idea being that low-value care will be displaced by higher-value care. Typically, those trade-offs are decided upon as a result of a set process.

A trade-off (or tradeoff) is a situational decision that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects. In simple terms, a tradeoff is where one thing increases, and another must decrease.

Opportunity cost is an economics term that refers to the loss of potential benefits from other options when one option is chosen. Opportunity cost in health care historically manifests in cost-effectiveness studies—what is the highest value manner in which to allocate resources to produce health benefits?

The necessity of making trade-offs alters how we feel about the decisions we face; more important, it affects the level of satisfaction we experience from the decisions we ultimately make. One of the most important areas where we need to pay attention to tradeoffs is when we make decisions.

1) after opening the eye at first and of deciding that this world is our rival or a friend. 2) choosing the streams English or commerce or Science. 3) death as the trade off that we have to face in our life.

There is no specific calculation for a trade-off, so determining the trade-off in any situation is not always easy. When deciding between two or more courses of action, ranking the alternatives from top to bottom can make you feel more confident that you are picking the right one.

Reduce prices and create jobs. This is the ideal economic outcome expected from all businesses today, not only in the long run, but also in the short term. Generally, lower prices allow more consumers to consume goods or services.

Trade-Offs Between Efficiency And Equity There is often a trade-off between economic efficiency and equity. Clearly, there is a trade-off between the speed of the process and its cost. Tim was happy with his trade-off -exchanginga short commute for a higher-paying job downtown.

Trade-offs are compensatory exchanges between the increase of some logistics costs and the reduction of other logistics costs and/or an increase in the level of customer service.

The risk-return tradeoff states that the potential return rises with an increase in risk. Using this principle, individuals associate low levels of uncertainty with low potential returns, and high levels of uncertainty or risk with high potential returns.

Types of Risk

• Systematic Risk – The overall impact of the market.
• Unsystematic Risk – Asset-specific or company-specific uncertainty.
• Political/Regulatory Risk – The impact of political decisions and changes in regulation.
• Financial Risk – The capital structure of a company (degree of financial leverage or debt burden)

Description: For example, Rohan faces a risk return trade off while making his decision to invest. If he deposits all his money in a saving bank account, he will earn a low return i.e. the interest rate paid by the bank, but all his money will be insured up to an amount of….

Definition: Higher risk is associated with greater probability of higher return and lower risk with a greater probability of smaller return. This trade off which an investor faces between risk and return while considering investment decisions is called the risk return trade off.

Return are the money you expect to earn on your investment. Risk is the chance that your actual return will differ from your expected return, and by how much. You could also define risk as the amount of volatility involved in a given investment.

Risk and Return Considerations. Risk, along with the return, is a major consideration in capital budgeting decisions. The firm must compare the expected return from a given investment with the risk associated with it. Higher levels of return are required to compensate for increased levels of risk.

Generally, the higher the potential return of an investment, the higher the risk. There is no guarantee that you will actually get a higher return by accepting more risk. Diversification enables you to reduce the risk of your portfolio without sacrificing potential returns.

Risk and Types of Risks: Widely, risks can be classified into three types: Business Risk, Non-Business Risk, and Financial Risk.

There is a positive relationship between the amount of risk assumed and the amount of expected return. Greater the risk, the larger the expected return and the larger the chances of substantial loss.

An economic theory proposed by professor and economist F.B. Hawley states that profit is a reward for risk taken in business. According to Hawley, the higher the risk in business, the greater the potential financial reward is for the business owner.

In the world of risk management, there are four main strategies:

• Avoid it.
• Reduce it.
• Transfer it.
• Accept it.

Sales risk refers to the uncertainty relating to the price and quantity of goods that are available for sale to consumers. Usually, sales risk may result in sales failures, and it can significantly affect the reported financial performance.

Also, according to the economic theory, risk and profitability are positively related (the more risky the investment, the higher the profits it should offer), thus since higher liquidity means less risk, it would also mean lower profits. According to Assaf Neto (2003, p.

Profitability enhances the equity reserves and growth prospects of the company. On the other hand, liquidity refers to the ability of the firm to meet short-term and long-term obligations which the business needs to pay in the long-run and the short-run the current portion of liabilities.

The liquidity of a firm is measured primarily by current ratio and net working capital whereas the profitability is measured by return on assets and return on equity. The liquidity focuses on short term assets which generate low profit and contain low risk.

Liquidity is the ability to convert an asset into cash easily and without losing money against the market price. Liquidity is important for learning how easily a company can pay off it’s short term liabilities and debts.