| Labor | Engaging in a physical or mental activity that generally produces a product, good, or service. |
| Labour discipline model | A model that explains how employers set wages so that employees receive an economic rent (called employment rent), which provides workers an incentive to work hard in order to avoid job termination. See also: employment rent, efficiency wages. |
| Labour force | The number of people in the population of working age who are, or wish to be, in work outside the household. They are either employed (including self-employed) or unemployed. See also: unemployment rate, employment rate, participation rate. |
| Labour market | In this market, employers offer wages to individuals who may agree to work under their direction. Economists say that employers are on the demand side of this market, while employees are on the supply side. See also: labour force. |
| Labour market equilibrium | The combination of the real wage and the level of employment determined by the intersection of the wage-setting and the price-setting curves. This is the Nash equilibrium of the labour market because neither employers nor workers could do better by changing their behaviour. See also: equilibrium unemployment, inflation-stabilizing rate of unemployment. |
| Labour market matching | The way in which employers looking for additional employees (that is, with vacancies) meet people seeking a new job. |
| Labour productivity | Total output divided by the number of hours or some other measure of labour input. |
| Labour-intensive | Making greater use of labour as an input in production as compared with machines and other inputs. See also: capital-intensive. |
| Lagging indicator | Evidence that can be used to support a conclusion but is only available after the fact. |
| Laissez faire | A method of market governance characterized by limited government involvement. |
| LAN | Local Area Network. A system for linking several PCs into a single system with a File Server PC that keeps a central database. Some databases are located on LANs. |
| Laser letter | A letter produced on a Laser Printer. Very clean and neat looking. Possible to have unlimited personalization of the text of the letter. |
| Law of demand | As the price of a good rises, the demand for that good will fall. Note that there are exceptions to this law (such as Veblen goods). |
| Law of one price | Holds when a good is traded at the same price across all buyers and sellers. If a good were sold at different prices in different places, a trader could buy it cheaply in one place and sell it at a higher price in another. See also: arbitrage. |
| Law of supply | As the price of an offering increases, the quantity supplied will increase. |
| Lead | A prospect who has responded is called a Lead. |
| Lead Conversion Rate | The percentage of leads which become customers. |
| Lead Tracking | The process of keeping up with what has happened to a lead (prospect who has expressed an interest in your product or service). Lead tracking is very difficult because salesmen hate to report on the status of leads. |
| Leading indicator | Evidence that can be used to predict an occurence. |
| Learning by doing | This occurs when the output per unit of inputs increases with greater experience in producing a good or service. |
| Legal tender | Coins or banknotes that must be accepted in payment of a debt. |
| Lending rate (bank) | The average interest rate charged by commercial banks to firms and households. This rate will typically be above the policy interest rate: the difference is the markup or spread on commercial lending. Also known as: market interest rate. See also: interest rate, policy rate. |
| Leontief paradox | The unexpected finding by Wassily Leontief that exports from the US were labour-intensive and its imports capital-intensive, a result that contradicts what the economic theories predicted: namely that a country abundant in capital (like the US) would export goods that used a large quantity of capital in their production. |
| Lettershop | An independent company that handles all the details of printing and mailing letters. |
| Leverage | See also: leverage ratio. |
| Leverage ratio (for banks or households) | The value of assets divided by the equity stake in those assets. |
| Leverage ratio (for non-bank companies) | The value of total liabilities divided by total assets. |
| Leveraged buyout | When a company is acquired using borrowed funds. The debt is usually repaid by money made by the acquired company. |
| Liabilities | Liabilities, on the other hand, are obligations owed by the business. Accounts payable, representing bills you must pay every month, are liability accounts, as are any long-term debts owed by the business. |
| Liability | The legal responsibility to pay for an injury. |
| Libor rate | Libor stands for the London interbank offered rate and provides the average interest rate at which major global banks borrow from one another. It is based on five currencies: |
| Lifestyle | Lifestyle data about a neighborhood comes from clustering. If a significant number of people in a given cluster have taken a foreign trip, it is assumed that all similar households have done this. It is a lifestyle attribute. Included are magazines read, TV programs watched, etc. |
| Lifetime value | The contribution to overhead and profit made by a customer during her total relationship with your company. Abbreviation: LTV. |
| Lift | The improvement in response from a mailing due to modeling and segmentation. Divide the response from a segment by the overall response, subtract 1 and multiply by 100. |
| Limit order | An announced price and quantity combination for an asset, either to be sold or bought. |
| Limited company | In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. |
| Limited liability company (llc) | A type of legal structure set up to conduct a business owned and run by members. Like a corporation, an LLC is considered a legal (but not a natural) person. |
| Limited partnership (lp) | A business that is owned by two or more persons of which one or more is liable for the debts of the business and one or more has no liability for the debts. |
| Linear regression line | The best-fitting line through a set of data. |
| Liquid | Assets held as cash, or easily convertible to cash; liquidity measures a company’s cash on hand or Cash flow. (Also see Capital Assets) |
| Liquid asset | Any asset which can be easily converted into cash. |
| Liquidity | Ease of buying or selling a financial asset at a predictable price. |
| Liquidity risk | The risk that an asset cannot be exchanged for cash rapidly enough to prevent a financial loss. |
| List broker | A service which brings list owners and prospective list renters (users) together. |
| List maintenance | Keeping a mailing list current through correcting and updating the addresses and other data. |
| List rental | The process of renting (for one time use, or other periods) a list of names of customers owned by some other organization for an agreed upon cost per thousand. |
| Loan Amounts | The loan amount — or credit line — that you can get with a credit business card depends totally on the type of card, your personal credit history, your business credit history (if you have any), and your business itself. However, the highest business credit limit right now probably tops out around $50,000. |
| Loan limits | If the lender doesn’t offer loans in the amount you need, find one that will. Settling for a lower amount could burden you with a loan that falls short of adequately addressing your capital needs. |
| Loan term | Your loan’s repayment term is the time frame you have to repay the loan. Short-term business loans have higher monthly payments, but you may pay less in total interest. If you take out a loan with a longer repayment term, your monthly payments may be lower, but you may have to pay more in total interest over the life of the loan. |
| Loan types | Find a company that offers the type of loan you’re looking for, such as a term loan or line of credit. To save time and ensure you get enough capital to start or grow your small business, consider what you need the funding for. For example, you might get a different loan for payroll than you would for real estate. |
| Lock in | The switching costs that customers experience when moving from an existing product to an alternative. The higher the switching costs, the more pricing power a vendor has over existing customers. Note that switching costs need not be monetary in nature. |
| Lock-in | A consequence of the network external effects that create winner-take-all competition. The competitive process results in an outcome that is difficult to change, even if users of the technology consider an alternative innovation superior. |
| Log scale | See also: ratio scale |
| Logarithmic scale | A way of measuring a quantity based on the logarithm function, f(x) = log(x). The logarithm function converts a ratio to a difference: log (a/b) = log a – log b. This is very useful for working with growth rates. For instance, if national income doubles from 50 to 100 in a poor country and from 1,000 to 2,000 in a rich country, the absolute difference in the first case is 50 and in the second 1,000, but log(100) – log(50) = 0.693, and log(2,000) – log(1,000) = 0.693. The ratio in each case is 2 and log(2) = 0.693. |
| Long run (model) | The term does not refer to a period of time, but instead to what is exogenous. A long-run cost curve, for example, refers to costs when the firm can fully adjust all of the inputs including its capital goods; but technology and the economy’s institutions are exogenous. See also: technology, institutions, short run (model), medium run (model). |
| Long-run equilibrium | An equilibrium that is achieved when variables that were held constant in the short run (for example, the number of firms in a market) are allowed to adjust, as people have time to respond the situation. |
| Loot box | An item that provides players with something of value within a video game. The nature of the value provided is often unknown to the player and randomly selected by the game. Loot boxes are purchased with either real or in game currency and are commonly found in free to play games. |
| Lorenz curve | A graphical representation of inequality of some quantity such as wealth or income. Individuals are arranged in ascending order by how much of this quantity they have, and the cumulative share of the total is then plotted against the cumulative share of the population. For complete equality of income, for example, it would be a straight line with a slope of one. The extent to which the curve falls below this perfect equality line is a measure of inequality. See also: Gini coefficient. |
| Loss aversion | Most people would be upset with a loss far more than they would appreciate an equivalent gain |
| Loss leader | A good sold at a price below the current market cost. This pricing is often used to lure shoppers into a store so that they are more likely to buy the vendor’s other products. |
| Low capacity utilization | When a firm or economy could increase output by increasing employment utilizing the existing capital goods. |
| Low touch | A sales process that does not require significant human interaction. |
| Loyalty | Customer loyalty is measured as Retention. A loyal customer is one who keeps buying from you. |
| Loyalty Programs | Rewards that encourage customers to keep being customers longer, or to purchase more. |
