Economy
Part 1
Question 1
Economic profit – it is the difference between the total financial revenue and total implicit and explicit costs.
Accounting profit- it is the difference between the total financial revenue and overall economic costs.
They both differ in that;
- Explicit costs are costs involving money that the firm has, and implicit costs are the opportunity costs of its resources.
- Accounting profit is the money a firm pays and the revenue it receives, and it is higher than the economic benefit.
- Economic profit, on the other hand, is the opportunity cost paid by the firm and the revenue got by the firm.
Question 2
Increased output of the product of a firm is directly associated with an increase in labor .it is not reasonable that every $ 100 spent on the outcomes of the industry has the same effect on the work and output. The amount spent on the firm’s products does not have the same impact as the on labor and production .like an example in the steel industry, they invest in so much machinery, and that would lead to less requirement of work and workforce. So the number of men employed and the capital input will rise and fall together always.
Question 3
From the short-run perspective, the total cost of a firm can is split into fixed costs that a firm must get before producing any output, and variable cost, which the firm experiences during production.
Fixed costs are submerged costs because they are in the past and cannot be changed and should play a part in the economic decisions and the cost of producing prices.
Variable costs show diminishing marginal returns, so the minimal cost of producing advanced levels of output increases.
The total cost is the addition of fixed and variable cost of production.
Question 4
In the long run, all inputs are changeable while in the short-run, some contributions are fixed and cannot change .long- run cost will always be less or equal to the short-run cost.
In the short run, the firm faces more limitations: all increments must go on using only the variable input, and additional restrictions increase the cost.
The enclosed relationship explains that at an organized output level, short-run average costs are equal to the long-run average total price. Still, at all other levels of output, the short-run average total cost is higher than the long-run average cost.
Part 2
Question1
The overall tax rates on the wealthiest 400 households by 2018 were 235, meaning that their total tax payments were equal to less than a quarter of their overall income .for middle class and less privileged families, it is different. The income taxes have also declined relatively for them. However, they haven’t benefited a lot from it in corporate tax and estate tax. They now pay more in payroll taxes, which in turn finance Medicare and social security than in the past.
Question 2
The most significant intervention today in New York is rent stabilization. The problem is that programs make the city’s housing less affordable for those who are unfortunate enough to live in a rent-regulated apartment. Half of the flats in the town are rent-regulated, so it leaves most of the people scrambling for the other half, which is so unfair for the people (Davidson. 2013).
Question 3
The minimum wage had increased in many states 7 million low –wage employees are affected by the increases and will earn an extra $8.2 billion over the year as a result of the changes.
A ruling from the federal court of Massachusetts concluded that au pairs are also entitled to the minimum wages. Parents are resisting the change stating that they can’t manage the increased cost of child care.
Question 4
The capitalist society is a fatal mantra that is frequently done to anyone who has questions on why America cannot be fair and equal. It is seen when the real estate moguls are expressing how they feel about the small business owners being evicted from their little storefronts in little Haiti (Desmond, .2019).
Question 5
Low income refers to the income that is earned in households and is below the average of the country income of the resident of that household .a country is considered to be of a low income when its gross national income is less than or equal to $1,025 per annum. And the economic growth rate is said to be depressed when the price of change in GDP in the current years is lower than the annual percentage change in real GDP in the previous year.
The high income is the income earned by an individual or household that is way above the average salary of the country of the household’s resident. A nation is therefore considered a high-income country when its gross national income (GNI) per capita is equal to or more than $ 12476 a year. The economic growth rate is said to be high when the annual percentage change in real GDP in the current year is more significant than the annual percentage change in real GDP in the previous year