Chapter 8 Terms 101 - P rofits Explained P rofits are a...

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Profits Explained: Profits are a part of costs because entrepreneurs must be rewarded for providing their services, or they will not provide them. Total Income or Total Output: Total income is the total of all individuals’ income and is also defined as the annual cost of producing the entire output of final goods and services. Total output is the value of all of the final goods and services produced in the economy during the year. Product Markets: Product Markets are where households are the buyers and businesses are the sellers of consumer goods. Factor Markets: In the Factor Markets households are the sellers; they sell resources such as labor, land, capital, and entrepreneurial ability. Why the Dollar Value of Total Output Value Must Equal Total Income: Total income is income earned by households in payment for the production of these goods and services. The value of total output is identical to total income, since spending by one group is income to another. (Supply = Demand, Says
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Chapter 8 Terms 101 - P rofits Explained P rofits are a...

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