It is also possible that managers do not adopt maximising behaviour at all, perhaps “satisficing” in response to shareholder discipline or that the policy of the firm is the result of complex interactions between various stakeholders. An For a firm to profit maximise, it would be the case that it sets output where marginal cost is equal to marginal revenue. If an additional unit of output were to be produced beyond this, it would add more to the firm’s costs of production than its revenue, thus reducing profit. The diagram below shows profit maximising output and the corresponding price, read from the demand curve. It also shows some other possible objectives for the firm.
How can the presence or absence of natural resources and arable land affect a nation’s economy, regardless of the type of economic system? 4. How can life expectancy and literacy rates affect the quality of labor in the economy? Does this influence the type of Economic system a nation runs? Why do you think the way you do?
An employer would not be able to hire an unskilled employee for the same amount of a skilled employee, who has been employed longer. Also, a raise in minimum wage would cause fewer turnovers, which costs the employer less, due to not having to train new employees
Macroeconomics Fundamentals Brian Aungst ECO/372 September 18, 2012 Reynaldo Vanta Macroeconomics Fundamentals Gross domestic product (GDP) is the value of goods and services that the nation produces and sells in one year. GDP is a good indicator of a nation’s growth. Real gross domestic product is the market value of goods and services produced and sold in a nation’s economy in one year. Real GDP is also nominal GDP adjusted for inflation. Nominal gross domestic product is the value of goods and services that the nation produces and sells in one year that has not been adjusted for inflation.
Also included in the sum are the net exports; the total exports minus the imports. There are many purchases done between companies during development of a final product, the cost of these purchases do not count toward the GDP because the cost of those purchases are considered in the final cost of the finished product. There are two basic versions of the GDP,
The expenditure method: the sum of the total expenditure on goods and services by households, govts and exports . (the value of exports minus the value of imports) 3. The income method: The sum of the income generated in the production of goods and services, which includes profits, wages and other employee payments, econome from rent and interest earned. Production, income and the circular flow diagram: The circular flow diagram shows the flow of spending and money in the economy. It illustrates the equality between GDP measured from the income and expenditure methods.
When the government prevents prices from adjusting naturally to supply and demand, efficiency is improved in the economy. ANSWER: F TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxviii]. A market economy cannot possibly produce a socially desirable outcome because individuals are motivated by their own selfish interests. ANSWER: F TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxix]. While the invisible hand cannot guarantee efficiency, it is better at guaranteeing equity.
Governments may choose to increase minimum wage on an arbitrary basis, making it difficult for companies to hire individuals at a consistent market rate. Government price controls distort the economic theory of supply and demand. Supply and demand is a significant underlying feature of free-market economies. This theory allows individuals and businesses to make decisions based on self-interest. Businesses often pay individuals a wage based on current market standards.
The benefits that one receives from Social Security are typically based on the amount of taxes that the person has paid over time; however a disproportionate amount is given to those earning a lower income since they need the money more. The purpose of assigning citizens a Social Security Number is to keep track of the money that each person puts into the system and each person can receive their entitled benefits upon retirement (or disability) (What is Social Security?). There is much debate over the dependability of the Social Security program and how long the
Say for instance that the US and the UK were on the same production function, but the U.S. economy were on the flat of the curve with little marginal gain in health at its current level of healthcare spending, then U.S. health outcomes might deteriorate relatively little when expenditures are cut back to the U.K. levels. This would result in substantial cost-saving and an increase in average productivity. But if the U.S. healthcare system lies on