Chapter4: Distribution (group 3)
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Transcript of Chapter4: Distribution (group 3)
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DISTRIBUTION
Chapter 4
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FACTOR PRICES AND INCOME DISTRIBUTION
Lesson 1
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Distribution of the National Income
1. Personal Distribution
- is the distribution of the National Income among the persons or households which produced the aggregative product of society.
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Lorenz Curve
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2. Functional Distribution
- distributes income according to one’s function or role in society.
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Functional Distribution of the Country’s Output
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FACTOR PAYMENTS AND ITS RELATED CONCEPTS
Lesson 2
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Rent (Upa)
Payment, usually monthly, for use of space or property.
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Wage (pasahod)
Price paid for human exertion or effort. Or called payment for manual labor and usually paid in money.
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Classifications of Wages
1. Time wages
-It has the basis of length of the time during which the laborer renders his services.
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Classifications of Wages
2. Piece wages-wages paid according to the amount of
work labor performs.
3. Fees-wages paid to professionals.
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Classifications of Wages
4. Commissions
- based on the percentage of the total sales of products or goods by memebers of the labor force.
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Classifications of Wages
5. Extra wages-wages in addition to the regular
salaries and income of workers.
6. Wages-in-kind-non-monetary wages paid to labor.
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Two kinds of labor
1. Physical labor(Skilled labor, semi-skilled labor, unskilled labor)
2.Mental labor(Professional labor, labor of administration and supervision, labor of invention and creation)
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Theories of wages
1. Subsistence theory of wages 2. Minimum wage theory 3. Wage fund doctrine
4. Marginal productivity theory of labor and wages
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Theories of wages
5. Demand and supply of labor theory
6. Bargaining theory 7. Business cycle theory
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Labor theory of value
-wage paid to labor is equal to the amount of work applied to produced a commodity or its cost.
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Demand for labor
-the firm hires more labor when the demand for its product goes up.
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Labor productivity and labor mobility
- the expected productivity of the workers lies behind the demand for labor.
-labor mobility is the ability of labor to move from one place industry or sector of economy to another
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Supply of labor
-in determining the amount of the labor supplied to an industry or firm the supply curves of all factors tend to be upward-sloping in the short-run.
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Interest
-a person usually receives income in the form of money.
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Interest rates vary among financial instruments because of differences :
1. Risk
2. Maturity
3. Liquidity
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Theories of interest
Agio or premium theory
-future goods are important
Abstinence theory
-income not consumed
Marginal productivity theory
-capital + interest
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Theories of interest
Supply and demand theory
-supply, demand and price go together
Government policies and interest rates
-loan paid in long period of time with low interest.
PROFIT -entrepreneurs income
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ENTREPRENEURIAL PROFITS-Profits are rewards of the
entrepreneur for his labor.
• Functional return• Residual return
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TYPES OF PROFIT
A. GROSS VIS-AS- VIS NET OR PURE-Remuneration vs. Contractual cost
B. NORMAL VIS-AVIS EXCESS-Gain profit vs . Profit + excess profit
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THE MEASURE OF PROFITS-The amount of profit made.
GENERATION OF PROFITS-Contineous profit.
RESULT OF MONOPOLY-The goods are unique.
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LABOR EXPLOITATION-Give what is due to caesar.
PROFIT AND INNOVATION-Innovators introduce the newest goods
and services.
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RISK AND PROFIT-Positive notion prosper.
ORGANIZATION OF PRODUCERS-Unity is the best policy.
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COLLECTIVE BARGAINING-Working condition must be observed.
EFFECTS OF UNIONS-Strong union and fair competition.
BUSINESS CARTELS-Learn,study and create.
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LAND REFORM VIS-À-VIS AGRARIAN REFORM
Lesson 3
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1.The difference between land reform and agrarian reform.
2.The difference between unemployment and underemployment
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3.The types of unemployment
4. Philippine unemployment rate
5. The Philippines’ rank regarding world poverty
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Land Reform
-The distribution of land from the landlords to the tenant farmers in order to improve the plight of these tenant farmers
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Agrarian Reform
-Is not a distribution land but goes beyond the question of land rights.
-Promote social justice
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Unemployment and Poverty
Unemployment- without jobs and actively looked for
work within four weeks
Underemployment- employed in a job but not within his
field of specialization; receiving less payment for his work
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Types of Unemployment
Seasonal Frictional Structural Cyclical Real Wage
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Unemployment rate- the level of unemployment divided by
the labor force
Labor force- the number of people employed and
unemployed but finding work
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7.1%-rate of unemployment in the Philippines in July of 2011(www.dole.gov.ph)
No.70 among 141 countries all over the world on a Population Below poverty line research