What will be produced in all economic systems
What will be produced in all economic systems?
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In order to be profitable, businesses must respond to consumers’ (individuals, other businesses, and the government) wants and desires. When businesses allocate resources in a way that is responsive, businesses will be profitable and allocative efficiency will be achieved. Accounting profits are total revenue minus total accounting costs. In economics, the return to the entrepreneur is treated just like the return to the worker, i.e., it is an economic cost and must be received if the entrepreneur is going to continue to produce in that industry. Normal profits are the return to the entrepreneur that is necessary for him/her to continue to produce that product. Any revenue received beyond normal profits is pure or economic profit.
Illustrate Scarcity and choice of Economic Perspective?
Distinguish between the resource market and product market in the circular flow model. In what way are businesses and households both sellers and buyers in this model? What are the flows in the circular flow model?
Entrepreneurs: (w) undertake risky forms of production to gain uncertain profits. (x) obtain interest payments for their services. (y) are usually overcompensated for their innovations. (z) receive virtually all their wealth by inheritance.
Explain producers in an industry are receiving pure or economic profits?
Describe the Promoting stability?
Explain how Entrepreneurs are risk-takers?
What are the major legal forms of business organization?
One early involvement of Adam Smith to the theory of gains by international trade, although later thoroughly revised and refined through David Ricardo, was the conception of: (1) mercantilism. (2) absolute advantage. (3) comparative a
Illustrate the characteristics of the Market System?
What is the opportunity cost of attending college? In 2000, nearly 80% of college-educated Americans held jobs, whereas only about 40% of those who did not finish high school held jobs. How might this difference relate to opportunity costs?
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