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Microeconomics

Microeconomics. Households and Businesses. Household Income Sources. Source of income %. Dividends. 1.7. Interest. 4.9. Proprietor’s Income. 8.4. Rental Income. 11.1. Social Security. 13.4. 64.7. Transfer Payments. -4.3. Wages and Salaries. Average Household Incomes.

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Microeconomics

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  1. Microeconomics Households and Businesses

  2. Household Income Sources Source of income % Dividends 1.7 Interest 4.9 Proprietor’s Income 8.4 Rental Income 11.1 Social Security 13.4 64.7 Transfer Payments -4.3 Wages and Salaries

  3. Average Household Incomes Characteristic Average Income All Households 68,728 Headed by married couple 62,405 Headed by female – husband gone 44,779 Household head 25-34 years old 43,318 Household head 65+ 36,835 Household head HS grad 29,307 23,787 Household head BA degree

  4. Household Expenditures Savings 79 19 Spending 2 Taxes

  5. Household Expenditures 59 Durable Goods Non-durable Goods 29 Services 12

  6. What to buy with $60? Maximizing Satisfaction Utility-Price Rule MUa/Pa MUb/Pb vs

  7. 10-3a Overview of Business • Business • Organization established to produce and sell goods and services. TABLE 10-3 The Ten Largest U.S. Corporate Employers: 2001

  8. Businesses Bill’s Pizza Bill and Ted’s Pizza and Sub Shop

  9. Businesses Number of Owners Types proprietorship _______ _______ partnership _______ corporation

  10. Businesses Liability Limited? Unlimited? proprietorship ______ ______ partnership ______ corporation

  11. Businesses Type Number Revenue proprietorship 71.6 4.4 8.5 12.0 partnership 20.0 83.6 corporation

  12. Stocks What are they? How can you get one? What are: NYSE - NASDAQ - Dow Jones -

  13. Mergers What are they? What are the differences between: Conglomerate - Vertical - Horizontal – Holding Company - mergers?

  14. 10-3g FIGURE 10-2 The Alltown Bank Holding Company Holding Company Example

  15. Ch 10 TRUE-FALSE QUESTIONS • The number of single-person households in the U.S. has been decreasing in recent decades. • Households headed by college graduates have among the highest average incomes in the U.S. • 3. A durable good has a useful lifetime of more than one year. • 4. Maximizing economic well-being by an individual requires balancing the costs and benefits of different actions that could be taken.

  16. Ch 10 TRUE-FALSE QUESTIONS • To maximize the satisfaction from consuming several different goods, expenditures must be allocated toward goods that have the lowest prices. • 6. A sole proprietor and a general partner are both subject to unlimited liability. • 7. Proprietorships generate the smallest percentage of total receipts of the three legal forms of business. The majority of total business receipts in the U.S. goes to corporations. • 8. Most U.S. businesses are organized as corporations.

  17. Ch 10 TRUE-FALSE QUESTIONS • A conglomerate merger occurs when one firm in a market acquires a competing firm in the same market. • A furniture and sofa manufacturer buying a lumber or fabric mill is an example of a vertical merger. • Profit or loss is what is left for a business after it subtracts its costs from the revenue received from selling its product. • 12. Profit or loss is equal to revenue divided by costs.

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