RMI-2302 Lecture Notes - Lecture 5: Sole Proprietorship, Marginal Utility, Marginal Cost
10 Feb 2017
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Income categorized by how it was earned and how it was divided among households. I(cid:374)di(cid:272)ates ho(cid:449) the (cid:374)atio(cid:374)"s ear(cid:374)ed i(cid:374)(cid:272)o(cid:373)e is apportio(cid:374)ed a(cid:373)o(cid:374)g (cid:449)ages, re(cid:374)ts, interest, and profits according to the function performed by the income receiver. I(cid:374)di(cid:272)ates ho(cid:449) the (cid:374)atio(cid:374)"s (cid:373)o(cid:374)e(cid:455) i(cid:374)(cid:272)o(cid:373)e is di(cid:448)ided a(cid:373)o(cid:374)g i(cid:374)di(cid:448)idual households. Households as spenders: households dispose of their income in the following ways. Us households paid 12% of their income to taxes in 2005; only 3% in 1941. Personal consumption expenditures: more than 85% of total household income flows back into the business sector as money spent on consumer goods, divided between durable goods (12%), nondurable goods (29%), and services (59%) Durable- life expectancy of 3 years or more. Nondurable- life expectancy less than 3 years. The business population: businesses constitute the second major part of the private sector, plant- physical establishment that performs one or more functions in fabricating and distributing goods and services, firm- business organization that owns and operates plants.
