Question description<\/p>\n
1-Functional Distribution of Income
\nExample: In a closed completely labor based economy total $40000 income has
\nbeen produced in the last year. The income has been distributed in the
\nfollowing ways.<\/p>\n
Functional distribution of total income
\nof $40000. <\/p>\n
\u00a0<\/p>\n
Economic Wages = $30000
\nEconomic Profit = $10000
\n2-Diminishing Returns
\nExample: Diminishing of labor after 15 units labor<\/p>\n
Labor Input<\/p>\n
Output<\/p>\n
Marginal
\nOutput<\/p>\n
10<\/p>\n
23<\/p>\n
0<\/p>\n
11<\/p>\n
26<\/p>\n
3<\/p>\n
12<\/p>\n
32<\/p>\n
6<\/p>\n
13<\/p>\n
39<\/p>\n
7<\/p>\n
14<\/p>\n
48<\/p>\n
9<\/p>\n
15<\/p>\n
59<\/p>\n
11<\/p>\n
16<\/p>\n
67<\/p>\n
8<\/p>\n
Diminishing Return<\/p>\n
17<\/p>\n
74<\/p>\n
7<\/p>\n
18<\/p>\n
79<\/p>\n
5<\/p>\n
19<\/p>\n
84<\/p>\n
5<\/p>\n
20<\/p>\n
88<\/p>\n
4<\/p>\n
Figure: Diminishing of labor after 15 units labor<\/p>\n
3-Wages
\nExample: An entrepreneur has opened a business.
\nIn this business, he has hired a person to which monthly $500 is paid. Here,
\n$500 is the economic wages (return for labor).\u00a0<\/p>\n
Figure: Economic Wage (Determined by labor demand
\nand labor supply)<\/p>\n
\u00a0<\/p>\n
Labor<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
\u00a0 <\/p>\n
4-Rents
\nExample: An entrepreneur has opened a business.
\nIn this business, his 2 hector land has been used for business purpose and he
\nis provided $50000 monthly for the use of his land. Here, $50000 is the
\neconomic rent (return for land).
\nFigure: Economic Rent (Shaded Area)<\/p>\n
\u00a0<\/p>\n
Land<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
\u00a0
\n5-Zero-Rent Land
\nA has two land. Two workers are needed to work on
\nthe land and grow crops. But A has only one worker available. Due to labor
\nshortage there is no production and no return from the land. Here, the land of
\nA is a zero rent land.
\n6-Profits
\nExample: An entrepreneur has opened a business
\nfrom which he has received $400000 as annual income. Here, $400000 is the
\neconomic profit (return to the proprietor for undertaking the risk).
\n7-Income distribution
\nExample: Distribution from the Income of $10000 of a car business is as
\nfollows.
\nRent for land:\u00a0 $2000
\nWage for Labor: $7000
\nProfit for Capital: $1000\u00a0
\n8-Extensive Margin Rent
\nExample: Suppose, from a 1000 decimal land total
\n50 kg rice if produced. Now if due to extraordinary fertility of a hand of 1000
\ndecimal 60 kg rice is is produced then Extensive Margin Rent will be 20%
\n[(60-50)\/50].
\n9-Intensive Margin Rent
\nExample:Suppose,
\nusually from a 1000 decimal land total 50 kg rice if produced. Then 55 kg is
\nproduced from a land of 1000 decimal by intensively and productively, intensive
\nmargin rent will be 10% [(55-50)\/50].
\n10-Falling Rate of Profit
\nExample: In India, population is continuously rising. This causes to
\nincrease the value of the land continuously even though the fertility of the
\nland is deteriorating. Thus return to the wage earner is decreasing and return
\nto the land owner is increasing.
\n11-Steady State
\nExample: Sweden is an example of Steady State
\nEconomy where population growth rate is zero and there is slightly increasing
\nstock of physical wealth.
\n12-Main Issue in Economics<\/p>\n
Answering of some questions to ensure
\nefficient allocation of scarce resources<\/p>\n
\u00a0<\/p>\n
Example: What to produce: Personal Computer
\n(PC)
\n\u00a0 How to produce: By using
\ntechnology and labor
\n\u00a0 For whom to produce: Who can
\neffort necessary
\n\u00a0 price for Personal Computer
\n(PC).\u00a0
\n13-Theory of Value
\nExample: For a mongo, if A pays $5, then as per
\n\u2018Theory of Value\u2019 the value of the mango to A is $5.
\n14-Labor Theory of Value
\nExample: Socially Necessary labor to produce a
\ncar = 300 labor hours and socially necessary labor to produce 10 karat gold =
\n300 labor hours. Then as per Labor Theory of Value, 10 karat gold and a car
\nwill have same value.
\n15-Trade: Law of Comparative
\nAdvantage
\nExample: M and N both country produces rice and
\ncar. M takes 3 labor hours to produce 1 kg of rice and 5 labor hours to
\nmanufacture 1 car. On the other hand, N takes 5 labor hours to produce 1 kg of
\nrice, and 3 labor hours to manufacture 1 car. Here, for country M, the
\nopportunity cost of producing 1 kg of rice is lower as compared to that of
\ncountry N. Thus, M has comparative advantage in the production of rice. On the
\nother hand, for country N, the opportunity cost of manufacturing 1 car is lower
\nas compared to that of country M. Thus, N has comparative advantage in the
\nproduction of rice. As M has comparative advantage in rice production, it
\nshould concentrate on rice production, and as N has comparative advantage in
\ncar manufacturing, it should concentrate on car manufacturing as per Law of
\nComparative Advantage theory.
\n16-Comparative Advantage
\nExample: M and N both country produces wood
\nchips. M is located in fertile land where lumber is abundant. On the other
\nhand, N is located in death valley where lumber is not abundant. In this case,
\nN country will require to spend more time and resources in producing wood chips
\nas compared to M country. Thus, M has comparative advantage in terms of
\nlocation and resource.
\n17-Public Finance: Ricardian
\nEquivalence
\nExample: As per Public Finance: Ricardian
\nEquivalence theory, it does not matter whether the US government raise the
\nnecessary funds though tax or debt to meet the public expenditure. US
\nGovernment spending can be both – Tax-Financed Government Spending and
\nDebt-Financed Government Spending.
\n18-Tax-Financed Government Spending
\nExample: The US government imposes tax of the
\nincome of the individuals and businesses. In a particular year if $5000 million
\ntax is collected, and then the amount is spent on infrastructure development of
\nthe country, $5000 million will be said Tax-Financed Government Spending.
\n19-Ricardian Equivalence
\nThe Portugal government has increased debt
\nfinanced government spending to increase the aggregate demand. But people of
\nthe Portugal are not increasing their spending or demand by considering the
\nfact that the government will raise tax in future to pay off debt undertaken to
\nfinance the spending, and thus they have to pay more tax in future.
\n20-Deductive Analysis
\nExample:
\nGather information to read and know law of demand. Based on the reading,
\nknowledge is gathered on the underlying basic relationship in between price and
\ndemand. After understanding the basic relationship in between price and demand,
\nobserve the underlying relationship in market for a product (example TV,
\nFridge, Shirt etc).<\/p>\n","protected":false},"excerpt":{"rendered":"
Question description 1-Functional Distribution of Income Example: In a closed completely labor based economy total $40000 income has been produced in the last year. The income has been distributed in the following ways. Functional distribution of total income of $40000. \u00a0 Economic Wages = $30000 Economic Profit = $10000 2-Diminishing Returns Example: Diminishing of labor […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,6515,8569,8567,8568,8570],"tags":[5882,6803,4009,7294,7293],"class_list":["post-47864","post","type-post","status-publish","format-standard","hentry","category-dissertation-writing","category-essay-writing","category-homework-assistance","category-online-assignment-help","category-paper-writing-services","category-write-my-essay-2","tag-best-essays-uk","tag-dissertation-topic-help","tag-do-my-essay-assignment-in-ireland","tag-essay-for-sale-australia","tag-help-with-writing-an-essay"],"_links":{"self":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/47864","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/comments?post=47864"}],"version-history":[{"count":0,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/47864\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/media?parent=47864"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/categories?post=47864"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/tags?post=47864"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}