Economic Concepts – Economics is a factor that helps everyone in day-to-day life. It balances the requirement with resources, financial inputs, and outputs. “Economics” is defined as a technique that balances the needs of an economy.
An appropriate balance between credit & debit is economics.
Economic concepts are not what young Architects are aware of, Architecture is an influential factor that affects the economy in many ways. It is the backbone of the development of an entire nation. In this Article, a discussion for a basic understanding of economic concepts explored further that Architects should be aware.
Economic Systems | Economic Concepts
It consists of varied factors such as a production system, allocation of resources, and exchange of products and services within a community; some types of the economic system comprise Capitalism, communism, socialism, and market economy.
Supply & Demand
One of the essential terms in the market system, if consumers of a particular commodity are great in number, the prices increase.
If many people want it, Demand increases. If the particular commodity is available in great numbers, the prices for the same decrease and when the supply is high, the value decreases.
Costs & Benefit
Based on the concept of rational choice, people try to make decisions based on the maximum ratio of benefits to costs in their decision.
Meaning they are making rational choices.
‘Benefit’ is a gain acquired as a result of a decision.
‘Cost’ is the loss incurred due to the choice or decision.
Factors of Production | Economic Concepts
The inputs are applied to the production process to generate outputs for the goods and services produced. Factors of production which make up the economy consist of land, labour, capital, and entrepreneurship.
For example, consider a manufacturing entity, where factors of products are land representing the natural resources used, labour representing the work done by workers, capital representing the building, machinery, equipment, and tools included in the production, all of this together creates the output.
Marginal Analysis
The marginal analysis has the additional cost incurred, likewise an additional benefit obtained from that particular.
Most companies plan to expand their business by adding another production category which increases Profits.
International trade
A Trade between countries for Goods and services.
Trade across to meet the demands which are insufficient in their respective nations. International Trades consists of Imports and Export.
Import is the purchase of goods or services from another country, which bought with the payment. Whereas on other occasions, exporting of Goods required by them takes place.
Trade-off – opportunity cost
A ‘Trade-off’ takes place when a commodity is chosen over another.
The loss sustained with no selection of that option termed as an
‘Opportunity cost’, for example, a trade-off occurs if a student takes a day off from university to go to a Restaurant. It happens when investment in other options occurs rather than the previous investment.
Equity | Economic Concepts
The investment in the home of the homeowner. The Market value of homes with deducted mortgages or liens against the property termed as ‘Equity‘. The remaining amount is the amount of equity left in the home. It is one of the crucial economic concepts in the Real Estate realm.
Appraisal
A written document that determines the value of a property on the market in terms of supply & Demand prepared by a certified Real Estate appraiser or a valuer. During the home sale, the mortgage lender appoints an appraiser for a professional opinion on the value of the property.
It helps the lender decide the amount of loan a buyer seeks in terms of the value of the property.
Mortgage
A written document with interest in real estate that gives the provision of security for the payment of interest on debt as well as principal guaranteed by the property registration.
The mortgage reserves possession and continues to enjoy the property benefits. Most construction is financed this way.
Real Estate
Land, Buildings, and any such property which houses activities and systems of the buildings, fixtures, building amenities, or other such items; included in a property termed as ‘Real Estate‘. It is grouped into categories based on its use – mainly residential, commercial, and industrial.
Real-Estate bubbles | Economic Concepts
A Real-Estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs from time to time in local and global Real Estate markets and results in a land boom.
A land boom is an excessive increase in the market value of real property such as housing Property.
Capital Gains
It is one of the economic concepts favourable for a property owner.
A profit incurred when a property has a worth higher than its previous value.
Increase in the Property asset due to external factors like amenities in the neighbourhood that other property lacks.
Increase in the value of a capital asset that has a higher worth than the original value.
Capital Loss
The loss occurs when a capital asset decreases in value and its worth decreases due to some factors. This loss comes into realisation when the assets sold at a lower price than its original purchase value.
Depreciation | Economic Concepts
A decline in the economic value of an asset takes place due to age, physical deterioration, and economic obsolescence. It can’t be remunerate by maintenance even by replacement of all components.
Business Cycle
Business cycles are a type of shift in the economic activity of a nation. A cycle consists of expansions and contractions or recessions occurring at the same time due to many economic activities. This sequence of changes is frequent but not periodic.
Liability | Economic Concepts
Defined as the state of being liable, in simpler terms, responsible, or owed something to someone. An obligation arises due to past transactions or events; the settlement results in the transfer of assets, provision of services, or other economic benefits in the future.
Debt is considered a form of liability.
References:
Asset Yogi (2020). Real Estate Terms, Definitions & Dictionary. [online].(Last updated: Oct 16 2019). Available at: assetyogi.com/resources/real-estate-terms-india [Accessed 21 Oct 2022].
Opendoor (2019). 52 Essential Real Estate terms you should know. [online].
(Last updated Oct 16 2019). Available at: www.opendoor.com/w/blog/real-estate-terms-you-should-know#:~:text=General%20real%20estate%20terms%201%20As-is%202%20Buyer’s,Escrow%20holder%208%20Homeowner’s%20association%20%28HOA%29%20More%20items [Accessed 21 Oct 2022].
Rishab Chaddha . Economic Concepts. [online]. (Last updated 2022].
Available at: www.wallstreetmojo.com/economic-concepts/#h-6-factors-of-production [Accessed 21 Oct 2022].
