Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 2, Problem 4P
Subpart (a):
To determine
Payment for entrepreneurial ability.
Subpart (b):
To determine
Revenue of businesses in product market.
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Let's put dollar amounts on the flows in the circular flow diagram below. Costs BUSINESSES buy resources • sell products $ Resources Goods $ and services Revenue billion RESOURCE MARKET • Households sell • Businesses buy billion PRODUCT MARKET • Businesses sell Households buy Money income (wages, rents, Labor, land, capital, neurial ability Instructions: Enter your answers as a whole number. a. Suppose that businesses buy a total of $200 billion of the four resources (labor, land, capital, and entrepreneurial ability) from households. If households receive $100 billion in wages, $30 billion in rent, and $40 billion in interest, how much are households paid for providing entrepreneurial ability? Interest, profits) HOUSEHOLDS • sell resources .buy products Goods and services Consumption expendit b. If households spend $105 billion on goods and $95 billion on services, how much in revenues do businesses receive in the product market?
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Consider the circular flow model: suppose that businesses buy a total of $220 billion of the four resources (land, labor, capital and entrepreneurial ability) from households. If households receive $120 billion in wages, $24 billion in rent, and $49 billion in interest, how much are households paid for providing entrepreneurial abiltity? A. $360 billion B. $60 billion C. 27 billion D. $100 billion
In your own words, explain the concept of the “invisible hand” as it relates to economic theory. Why is it that an entrepreneur with seemingly selfish motives can create benefits for the larger society? Why is this a benefit that arises from capitalism and not from other economic systems?
Chapter 2 Solutions
Macroeconomics
Ch. 2.2 - Prob. 1QQCh. 2.2 - Prob. 2QQCh. 2.2 - Prob. 3QQCh. 2.2 - Prob. 4QQCh. 2 - Prob. 1DQCh. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Prob. 5DQCh. 2 - Prob. 6DQ
Ch. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQCh. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Prob. 13DQCh. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4P
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