Economics, Chapter 1
| A | B |
|---|---|
| The markets where productive resources are bought and sold. | factor market |
| markets where producers offer goods and services for sale. | product market |
| the quality of life based on the possession of necessities and luxuries tha make life easier. | Standard of living. |
Where do households get the money to buy food in the product markets?
How do households get money to buy goods and services? They provide labor or rent other factors of production to businesses at the factor market. What do consumers, that is, households get from providing labor or renting other factors of production to businesses at the factor market?
What is the motivating force in the free market?
Self interest is the motivating force in a free market.
What are the 3 productive resources?
There are three basic productive resources: natural resources, human resources, and capital resources. Natural resources are things such as minerals, water, trees, and land itself.
What’s the average income of the average consumer?
The average consumer in the bottom 60% of earners spends more than he or she earns. The same research on consumer spending by income level from the Bureau of Labor Statistics shows that serious over-spending is a problem for consumers younger than 25 and older than 65.
Where does the average household get its money from?
As you can see above the average household generates $73,574 of total inflows, with 84.4% of that coming from salary, and smaller portions coming from social security (11.3%), dividends and property (2.6%), and other income (1.7%).
Where does the majority of your income come from?
Income is money that an individual or business receives in exchange for providing a good or service or through investing capital. Income is used to fund day-to-day expenditures. People aged 65 and under typically receive the majority of their income from a salary or wages earned from a job.
How does income affect consumer spending and the economy?
Changes in any of these components will affect consumer spending. The most important determinant is disposable income. 5 That’s the average income minus taxes. 6 Without it, no one would have the funds to buy the things they need. That makes disposable income one of the most important determinants of demand. As income increases so does demand.
