Supported by the government rawls maximin principle

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supported by the government Rawl’s Maximin Principle - government should maximize the benefits going to the most disadvantaged group Utilitarianism - the government should implement policy to maximize a society’s total unity A good is non-rival if one person’s use of the good does not reduce the ability of another person to use the good. A good is excludable if people who don’t pay for the good can easily be prevented from obtaining it. Public Goods – (non-rival/non-excludable) include national defense and lighthouses and are often supplied by gov’t because private market will undersupply. Finding efficient level of output requires adding together consumer’s total willingness to pay (add all demand curves vertically.
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Nozick’s Entitlement Theory - distribution of income itself does not matter as long as the income was justly obtained via free trade between two agreeable parties Chapter 22: Managing Incentives Controllable vs Uncontrollable Risk: -Sources of month to month variation in sales: -Uncontrollable: weather, national economy, Mizzou football performance -Controllable: Employee effort or theft, sales promotions. Forms of compensation: -Piece rate compensation attracts more productive workers because it gives them the opportunity to benefit more from their productivity. Firm and workers must trust each other to successfully implement piece rate. -Tournament pay is when compensation is based on relative performance and ties rewards more closely to actions that an agent can control, improving productivity. Includes grading on a curve. Reduces environment risk (bad professor) but can increase ability risk (your classmates are smarter). Can reduce cooperation. Must be structured correctly to avoid ability risk (tournament brackets or divisions). Chapter 23: Stock Markets and Personal Finance Sigma (σ) is a measure of risk using standard deviation and measures the distribution of an asset price around the average value. A higher value of σ or a larger variation from the average price implies more risk. Return (%) From a Stock = increase in stock (%) + dividend rate (%). A stock priced at $100 per share which pays a dividend of $1 per share every quarter results in a 4% (4/100) dividend rate, and, if that stock appreciates in price from $100 to $105 in that period this is an additional 5%. Add the two together for a total return of 9%. Discounting: $1 today is worth $ 1 x (1 + i) in a year, where i is the interest rate. Example: if i = .03, $1 today is worth $1.03 next year. $1 today is worth $1 x (1.03) 5 = $1.16 in five years, $1 x (1.03) 10 = $1.34 in ten yrs, etc. So, A payment of $1 one year from now is worth $1/(1 + i) today. A payment of $1 ten years from now is worth $1/(1+i) 10 today, etc. At i= .03 $1 paid in one year is worth $0.97 today. $1 paid in ten years from now is worth $0.74 today.
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