Why an economy’s income must equal its expenditure.

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Answer 1

Question

Chapter 23, Problem 1QR

To determine

Why an economy’s income must equal its expenditure.

Expert Solution & Answer

Explanation of Solution

The economy transacts the goods and services for getting the money in return. This means that the money acts as a medium between the buyers and sellers. When the buyers give money, it is the consumption expenditure of the consumers or the buyers. When the sellers receive money in return for the goods and services that they rendered to the consumers, it becomes their income. Thus, every transaction in the economy has a buyer and a seller, and every expenditure by the buyers turns out to be income of the seller. Therefore, it can be said that an economy’s income must equal its expenditures.

Economics Concept Introduction

Concept introduction:

Expenditure: Total expenditure refers to the total amount of money spent by the firm, individual, or government on a product in a given period of time.

National income: National income refers to the sum of all the income received within a given period of time.

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Students have asked these similar questions

Wolfgang is a typical producer in a perfectly competitive piano industry (i.e., all other producers of pianos face the same costs as Wolfgang). The following production and cost data apply to the long run as well as the short run. Fixed costs (rent) are unrecoverable in the short run and are equal to $2400 per month. Variable costs consist of raw materials (wire, wood, plastic), which cost $1000 per piano, and the $40 per hour opportunity cost of Wolfgang's time. Wolfgang's production function is given in the table at right. Wolfgang will shut down if the price per piano is less than OA. $3000. B. $4000. O C. $5000. ○ D. None of the above. Pianos (Q) Hours (L) Raw Materials ( 0 0 0 1 100 1000 2 150 2000 3 240 3000 4 400 4000

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Using the grapns below, wnicn snow the snort-run cost curves for 3 perfectly competitive firms in the same industry, determine whether the industry is in long-run equilibrium or not. Q Q Firm A QA MC ATC Output Firm B QB MC ATC Firm C MC ATC Output Output Qc If Firms A, B and C are in the same industry, is this industry in long-run equilibrium? ○ A. Yes, because P = MC = MR for each of the 3 firms. ○ B. No, because Firm A is not producing at a profit-maximizing level of output. ○ C. Yes, because all 3 firms are producing at their minimum average total cost. OD. The answer is uncertain since it's unknown whether the firms are producing at the minimum efficient scale or not. ○ E. No, because if the industry were in equilibrium, all 3 firms would be earning zero economic profits.

Answer 2

Question

Chapter 23, Problem 1QR

To determine

Why an economy’s income must equal its expenditure.

Expert Solution & Answer

Explanation of Solution

The economy transacts the goods and services for getting the money in return. This means that the money acts as a medium between the buyers and sellers. When the buyers give money, it is the consumption expenditure of the consumers or the buyers. When the sellers receive money in return for the goods and services that they rendered to the consumers, it becomes their income. Thus, every transaction in the economy has a buyer and a seller, and every expenditure by the buyers turns out to be income of the seller. Therefore, it can be said that an economy’s income must equal its expenditures.

Economics Concept Introduction

Concept introduction:

Expenditure: Total expenditure refers to the total amount of money spent by the firm, individual, or government on a product in a given period of time.

National income: National income refers to the sum of all the income received within a given period of time.

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Answer 3

Question

Chapter 23, Problem 1QR

To determine

Why an economy’s income must equal its expenditure.

Expert Solution & Answer

Explanation of Solution

The economy transacts the goods and services for getting the money in return. This means that the money acts as a medium between the buyers and sellers. When the buyers give money, it is the consumption expenditure of the consumers or the buyers. When the sellers receive money in return for the goods and services that they rendered to the consumers, it becomes their income. Thus, every transaction in the economy has a buyer and a seller, and every expenditure by the buyers turns out to be income of the seller. Therefore, it can be said that an economy’s income must equal its expenditures.

Economics Concept Introduction

Concept introduction:

Expenditure: Total expenditure refers to the total amount of money spent by the firm, individual, or government on a product in a given period of time.

National income: National income refers to the sum of all the income received within a given period of time.

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Answer 4

Question

Chapter 23, Problem 1QR

To determine

Why an economy’s income must equal its expenditure.

Expert Solution & Answer

Explanation of Solution

The economy transacts the goods and services for getting the money in return. This means that the money acts as a medium between the buyers and sellers. When the buyers give money, it is the consumption expenditure of the consumers or the buyers. When the sellers receive money in return for the goods and services that they rendered to the consumers, it becomes their income. Thus, every transaction in the economy has a buyer and a seller, and every expenditure by the buyers turns out to be income of the seller. Therefore, it can be said that an economy’s income must equal its expenditures.

Economics Concept Introduction

Concept introduction:

Expenditure: Total expenditure refers to the total amount of money spent by the firm, individual, or government on a product in a given period of time.

National income: National income refers to the sum of all the income received within a given period of time.

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Answer 5

Chapter 23, Problem 1QR

To determine

Why an economy’s income must equal its expenditure.

Expert Solution & Answer

Explanation of Solution

The economy transacts the goods and services for getting the money in return. This means that the money acts as a medium between the buyers and sellers. When the buyers give money, it is the consumption expenditure of the consumers or the buyers. When the sellers receive money in return for the goods and services that they rendered to the consumers, it becomes their income. Thus, every transaction in the economy has a buyer and a seller, and every expenditure by the buyers turns out to be income of the seller. Therefore, it can be said that an economy’s income must equal its expenditures.

Economics Concept Introduction

Concept introduction:

Expenditure: Total expenditure refers to the total amount of money spent by the firm, individual, or government on a product in a given period of time.

National income: National income refers to the sum of all the income received within a given period of time.

Answer 6

Chapter 23, Problem 1QR

To determine

Why an economy’s income must equal its expenditure.

Expert Solution & Answer

Explanation of Solution

The economy transacts the goods and services for getting the money in return. This means that the money acts as a medium between the buyers and sellers. When the buyers give money, it is the consumption expenditure of the consumers or the buyers. When the sellers receive money in return for the goods and services that they rendered to the consumers, it becomes their income. Thus, every transaction in the economy has a buyer and a seller, and every expenditure by the buyers turns out to be income of the seller. Therefore, it can be said that an economy’s income must equal its expenditures.

Economics Concept Introduction

Concept introduction:

Expenditure: Total expenditure refers to the total amount of money spent by the firm, individual, or government on a product in a given period of time.

National income: National income refers to the sum of all the income received within a given period of time.

Answer 7

Chapter 23, Problem 1QR

To determine

Why an economy’s income must equal its expenditure.

Answer 8

Expert Solution & Answer

Explanation of Solution

The economy transacts the goods and services for getting the money in return. This means that the money acts as a medium between the buyers and sellers. When the buyers give money, it is the consumption expenditure of the consumers or the buyers. When the sellers receive money in return for the goods and services that they rendered to the consumers, it becomes their income. Thus, every transaction in the economy has a buyer and a seller, and every expenditure by the buyers turns out to be income of the seller. Therefore, it can be said that an economy’s income must equal its expenditures.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

Expenditure: Total expenditure refers to the total amount of money spent by the firm, individual, or government on a product in a given period of time.

National income: National income refers to the sum of all the income received within a given period of time.

Answer 12

Ch. 23.1 - Prob. 1QQ Ch. 23.2 - Prob. 2QQ Ch. 23.3 - Prob. 3QQ Ch. 23.4 - Prob. 4QQ Ch. 23.5 - Prob. 5QQ Ch. 23 - Prob. 1QR Ch. 23 - Prob. 2QR Ch. 23 - Prob. 3QR Ch. 23 - Prob. 4QR Ch. 23 - Prob. 5QR

Why an economy’s income must equal its expenditure.

Why an economy’s income must equal its expenditure.

Explanation of Solution

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Chapter 23 Solutions