Chapter 2 homework Numbers 4, 8 and 12 Comparative Advantage Problem Now…the multiple choice...
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Transcript of Chapter 2 homework Numbers 4, 8 and 12 Comparative Advantage Problem Now…the multiple choice...
![Page 1: Chapter 2 homework Numbers 4, 8 and 12 Comparative Advantage Problem Now…the multiple choice answers.](https://reader035.fdocuments.us/reader035/viewer/2022062407/56649d3a5503460f94a14b77/html5/thumbnails/1.jpg)
Chapter 2 homework
• Numbers 4, 8 and 12
• Comparative Advantage Problem
• Now…the multiple choice answers
![Page 2: Chapter 2 homework Numbers 4, 8 and 12 Comparative Advantage Problem Now…the multiple choice answers.](https://reader035.fdocuments.us/reader035/viewer/2022062407/56649d3a5503460f94a14b77/html5/thumbnails/2.jpg)
Chapter 3
The American Economy in a Global Setting
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“What Goes Around Comes Around”
• When firms prosper, so do households. When households struggle, so do firms.
• What are the economic forces that connect the well-being of households and firms?
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The Circular Flow of Economic Activity
• Households and firms depends on the well-being of each other.
• This interaction is represented by the circular flow model.
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Figure 3.1 The Circular Flow of Economic Activity
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Households
• Is the typical family 2 parents, 2 children, and a dog??? TV depicts this family….
• Characteristics: One-fourth are headed by single individuals. About half are headed by two parents. They are aging. They are geographically mobile.
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Firms
• Firms take on many different forms: Sole Proprietorships• Only one owner
Partnerships• Several owners pool their resources.
Corporations• Sell ownership in the form of stock
Stockholders have no financial liability beyond the value of their stock
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Figure 3.2 The Changing Pattern in U.S. Production Between 1947 and 2004
FIRE Finance, insurance, and real estate
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Changes in the U.S. Economy
• Major trends: More service sector jobs
• These are not only cleaning and retail jobs Legal services Health services Social services
Who buys from the product market?
• 62% comes from consumers
• 14% comes from other firms
• 16% comes from the government
• 8% comes from foreign firms, consumers, and government
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Where does the money come from?
• Income from the resource market takes the form of payments to: Labor wages, salaries, and other
compensation
Landowners rent
Capital interest
Entrepreneurial skill profit
• Proprietor's income from partnerships
• Corporate profits from corporations
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Figure 3.3 Sources of Incomein the United States Economy in 2004
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The Government Sector of the Economy
• Direct effects: Adding to or taking from the flow of income
• Indirect effects: Purchasing goods and resources in markets
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Levels of Government and the Circular Flow
• Local Government Collects property taxes Provides parks, museums, schools, police protection
• State Government Collects sales taxes Provides roads and school systems
• Federal Government Collects income taxes Pays transfer payments Provides national defense and interstate highways