ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A person / group of people that share their income.
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An organization that produces goods / services for sale.
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The way total income is divided among owners of various factors of production.
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Cost that’s already been incurred & can’t be recovered.
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Detailed explanation-1: -The correct option is B. Money prices of factors of production. The owners of various factors of production sell their factors at market prices; say owners of land earn rent, wages to labour, interest to capital and profit to entrepreneurs. These factor incomes constitute the national income.
Detailed explanation-2: -distribution theory, in economics, the systematic attempt to account for the sharing of the national income among the owners of the factors of production-land, labour, and capital. Traditionally, economists have studied how the costs of these factors and the size of their return-rent, wages, and profits-are fixed.
Detailed explanation-3: -The distribution of income is simply a statistical measure of how many people earn or receive various amounts of income. However, people, including many economists, often mistakenly talk as if society is “distributing” income and people are passively receiving it.
Detailed explanation-4: -The term “income distribution” is a statistical concept. No one person is distributing income. Rather, the income distribution arises from people’s decisions about work, saving, and investment as they interact through markets and are affected by the tax system.
Detailed explanation-5: -The Gini index, or Gini co-efficient, measures income distribution across a population.