11.23.10 Econ

11.23.10 Econ - 11.23.10 Econ Notes Net worth = Wealth...

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11.23.10 Econ Notes Net worth = Wealth Wealth = Assets – Debt Lots of people in the US with high wealth and low income Ex. Recent UVA Grad Home = $500,000 Car = 40,000 Mutual Fund 150,000 Electronic Products 10,000 Assets = 700,000 Mortgage on home = 400,000 Balance on Student loans = 50,000 Liabilities = 450,000 Wealth = 250,000 Human Capital = 2,000,000 Wealth (or net worth) Econ 201 Perspective = 2,250,000 Imagine a world where all workers are the same and all jobs are the same. From the standpoints of supply of labor and employers all look the same. Hard to imagine, but everyone would make the same wage rate. Once you introduce different jobs, you get multiple equilibriums in wage rates. Demand for George Clooney’s services are greater than all the other wannabes Tournament markets (Hot topic) By paying a CEO a high salary, society gives society an incentive to hopefully be a CEO and “win the tournament” and achieve that high income. That’s why we have so many people working under CEO’s because they all hope that one day they’ll earn that much money
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This note was uploaded on 02/24/2011 for the course ECON ECON 201 taught by Professor Elzinga during the Spring '09 term at UVA.

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11.23.10 Econ - 11.23.10 Econ Notes Net worth = Wealth...

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