Notesale: Turn your study into money

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Economic Decision Makers

The household
Households play the starring role in a market economy
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Their supplies of labour capital , natural resources and entrepreneurial
ability produce the output
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The evolution of the household
The rise of two earner households has affected the family as an economic unit
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For example childcare services and fast food
restaurants have displaced some household production
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The rise in two earner families has reduced specialization within the household
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Nonetheless some production still occurs in the home
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S
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All those who live under one roof are considered part
of the same household
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Households as resource suppliers
Households use their limited resources labour , capital , natural resources and entrepreneurial ability in
an attempt to satisfy their unlimited wants
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They can also sell these resources market and use this income to buy goods and services in the
product market
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They can use these
resources to produce goods and services in their homes
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Grew their
own food and amused themselves with books, games and hobbies
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The evolution of the firm

For about hundred years , profit seeking entrepreneur relied on putting out raw material like wool and
cotton
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The system developed in the British Isles , where workers cottages served as tiny factories
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You might think of the world
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Types of firms
Corporations:
The most influential form of business is the corporation
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A major advantage of the corporate form is that many investors
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Law, accounting
and medical partnership typify this business form
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Sole proprietorships :
The simplest form of business organizations is the sole proprietorship , a single owner firm
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To organize a sole proprietorship the
proprietor simply opens for business by , for example taking out a classified and announcing availability
for plumbing or whatever it may be
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Also since the sole proprietor has no partners or other financial backers , raising
enough money to get business going can be challenging
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Some institutions such as museums , ballet
companies , non profit hospital , the Red Cross , the salvation army , churches synagogues , mosques
and perhaps the college you attend are private organisations that do not have profit as an explicit goal
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Household production reduces transaction costs
Getting estimates , hiring a contractor , negotiating terms and require information
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Household production also allows for more personal control
over the final product than is usually available through the market for example , some people prefer
home cooked meals , because they can season home cooked meal to individual tastes
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Sanding a wooden floor , however it involves special machinery and expertise , so
this serve is left to professionals
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Households usually perform domestic chores that demand neither
expertise nor special machinery
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Which is an
agreement among firms to divide the market and fix the price or an individual firms way try to
eliminate the competition by using unfair business practices
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Government anti trust law try to promote
competition by prohibiting collusion and other anti competitive practices
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The government try
to make sure that market participants abide by the rule of the game
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Regulating natural Monopolies ; competition usually keeps the product price below what it
would be without competition that is below the price charged by a monopoly , a sole suppliers
to the market
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One person’s benefit from
the good does not diminish the amount available to others
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But sometimes production , condition imposes costs or benefits on
third parties on those who are neither supplies nor demanders in a market transaction
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Nearly all citizens agree that government should redistribute income to the poor (
note the normative nature of this statement
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The
government through it’s ability to tax to spend and to control the money supply attempts to
promote full employment , price stability and economic growth pursuing these objectives by
taxing and spending is called fiscal policy pursuing them by regulating the money supply is called
monetary policy
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