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Microeconomics

This overview provides insight into various sources of household income, illustrating average incomes based on demographics such as age, education, and household structure. It examines the role of wages, salaries, dividends, and social security in shaping household finances, alongside expenditures on durable and non-durable goods. Additionally, the business section discusses types of business organizations (proprietorships, partnerships, corporations) and their implications for liability and revenue. This analysis is essential for grasping microeconomic principles related to income and business operations.

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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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