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Market incentives, such as reflected in prices of outputs and inputs, are theorized to attract factors of production, including labor, into activities according to comparative advantage, that is, for which they each have a low opportunity cost. The factor owners then use their increased income from such specialization to buy more-valued goods ...
In labor economics, an efficiency wage is a wage paid in excess of the market-clearing wage to increase the labor productivity of workers. [1] Specifically, it points to the incentive for managers to pay their employees more than the market-clearing wage to increase their productivity or to reduce the costs associated with employee turnover.
Economist Arthur Pigou used the concept of externalities developed by Alfred Marshall to suggest that taxes and subsidies should be used to internalise costs that are not fully captured by existing market structures. [4] In his honour, these have been named Pigouvian taxes and subsidies. [5]
A production subsidy encourages suppliers to increase the output of a particular product by partially offsetting the production costs or losses. [12] The objective of production subsidies is to expand production of a particular product more so that the market would promote but without raising the final price to consumers.
Governments use trade tariffs to artificially boost the price of imports to help domestic producers compete. Monopolies avoid the laws of supply and demand by removing competition.
Some environmental economists have proposed that efficiency gains be coupled with conservation policies that keep the cost of use the same (or higher) to avoid the Jevons paradox. [8] Conservation policies that increase cost of use (such as cap and trade or green taxes) can be used to control the rebound effect. [9]
Tariffs projected to cost $2,600 per household. A tariff is a fee on imports, which proponents believe helps domestic manufacturers. Trump has proposed a 10% to 20% tariff on all $3 trillion per ...
Supply-side economics is a macroeconomic theory postulating that economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. [1] [2] According to supply-side economics theory, consumers will benefit from greater supply of goods and services at lower prices, and employment will increase. [3]