Thin and Broad Markets: -Thin markets: markets with very few participants -Broad markets: markets with many participants Barter: goods for goods Resource Markets: Money for goods; can obtain labor, land, or capital Households supply land, capital, and labor to businesses for dollars (and this exchange occurs in resource markets). L: Land K: capital N: Labor 2 kinds of labor: laborer and entrepreneur Land (L) Rent (R) Labor (N) Wage (W) Capital (K) Interest (i) Entrepreneur profit (?) Entrepreneur: French for undertaker R, W, and i are all costs; all remaining revenues are ?. HouseholdsLKNResource Markets?Businesses$Resource Markets$Households National Income = W + R + i + ? = GDP Hypothetical Situation: Texaco Station: 1,000,000 gal/ year @ $1/ gal. Total revenue = $1,000,000 That Texaco Station individually contributes $1,000,000 to the GDP. Wages = $300 k Rent = $300 k Interest = $300 k Total Cost = $900 k ? = $100 k Every dollar taken in is paid out, cash flow = business flow = GDP growth.
Want to see the other 1 page(s) in Thin and broad Markets?JOIN TODAY FOR FREE!