 | Economics 14/e McConnell | |||||
|---|---|---|---|---|---|---|
| Online Learning Center |  | |||||
| Economics 14/e McConnell | |||||
|---|---|---|---|---|---|---|
| Online Learning Center | | |||||
functional distribution of income
The manner in which national income is divided among the functions performed to earn it (or the kinds of resources provided to earn it); the division of national income into wages and salaries proprietors’ income corporate profits interest and rent.
personal distribution of income
The manner in which the economy’s personal or disposable income is divided among different income classes or different households.
durable good
A consumer good with an expected life (use) of 3 or more years.
nondurable good
A consumer good with an expected life (use) of less than 3 years.
services
An (intangible) act or use for which a consumer firm or government is willing to pay.
plant
A physical establishment which performs one or more functions in the production fabrication and distribution of goods and services.
firm
An organization which employs resources to produce a good or service for profit and owns and operates one or more plants.
vertical combination
A group of plants engaged in different stages of the production of a final product and owned by a single firm.
horizontal combination
A group of plants in the same stage of production which are owned by a single firm.
conglomerate combination
A group of plants owned by a single firm and engaged at one or more stages in the production of different products (of products that do not compete with each other).
industry
A group of (one or more) firms which produces identical or similar products.
sole proprietorship
An unincorporated firm owned and operated by one person.
partnership
An unincorporated firm owned and operated by two or more persons.
corporation
A legal entity (“person”) chartered by a state or the Federal government which is distinct and separate from the individuals who own it.
stocks
An ownership share in a corporation.
bonds
A financial device through which a borrower (a firm or government) is obligated to pay the principle and interest on a loan at a specific date in the future.
limited liability
Restriction of the maximum loss to a predetermined amount for the owners (stockholders) of a corporation; the maximum loss is the amount they paid for their shares of stock.
double taxation
The taxation of both corporate net income (profits) and the dividends paid from this net income when they become the personal income of households.
principal-agent problem
A conflict of interest which occurs when agents (workers or managers) pursue their own objectives to the detriment of the principals’ (stockholders) goals.
monopoly
A market structure in which the number of sellers is so small that each seller is able to influence the total supply and the price of the good or service. (Also see Pure monopoly.)
spillover costs
A cost imposed without compensation on third parties by the production or consumption of sellers or buyers. Example: A manufacturer dumps toxic chemicals into a river killing the fish sport fishers seek.
spillover benefits
A benefit obtained without compensation by third parties from the production or consumption of sellers or buyers. Example: A beekeeper benefits when a neighboring farmer plants clover.
exclusion principle
The ability to exclude those who do not pay for a product from receiving its benefits.
public goods
A good or service which is indivisible and to which the exclusion principle does not apply; a good or service with these characteristics provided by government.
free-rider problem
The inability of potential providers of an economically desirable but indivisible good or service to obtain payment from those who benefit because the exclusion principle is not applicable.
quasipublic goods
A good or service to which the exclusion principle could apply but which has such a large spillover benefit that government sponsors its production to prevent an underallocation of resources.
government purchases
Disbursements of money by government for which government receives a currently produced good or service in return; the expenditures of all governments in the economy for final goods and services.
transfer payments
A payment of money (or goods and services) by a government to a household or firm for which the payer receives no good or service directly in return.
personal income tax
A tax levied on the taxable income of individuals households and unincorporated firms.
marginal tax rate
The tax rate paid on each additional dollar of income.
average tax rate
Total tax paid divided by total (taxable) income as a percentage.
payroll taxes
A tax levied on employers of labor equal to a percentage of all or part of the wages and salaries paid by them; and on employees equal to a percentage of all or part of the wages and salaries received by them.
corporate income tax
A tax levied on the net income (profit) of corporations.
sales and excise taxes
A tax levied on the cost (at retail) of a broad group of products.
property taxes
A tax on the value of property (capital land stocks and bonds and other assets) owned by firms and households.
fiscal federalism
The system of transfers (grants) by which the Federal government shares its revenues with state and local governments.
lotteries
State and/or local government sponsored voluntary gambling enterprise. A controversial topic (see page 96).
MHHE Home | About MHHE | Help Desk | Legal Policies and Info | Order Info | What's New | Get Involved
