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since there will be leakages from the circular flow
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Write a note on innovation theory of profit?
Prof. Schumpeter attributes profit to dynamic changes resulting from an innovation. To start with he takes a capitalist closed economy which is in a stationary equilibrium. This equilibrium is characterised by what Schumpeter calls a "circular flow" which continues to repeat itself for ever. In such a static state, there is perfectly competitive equilibrium. The price of each product just equals its cost of production and there is no profit. Only exogenous factors like whether conditions can cause changes in the circular flow position. In the circular flow position goods are being produced at a constant rate. This routine work is being performed by the salaried managers. It is the entrepreneur who disturbs the channels of this circular floe by the introduction of an innovation. Thus Schumpeter assigns the role of an innovator not to the capitalist but to the entrepreneur.
Using the circular flow model explain why the value of business output of goods and services equals the income of households?
Answer: The circular flow model is a diagram representing the flow of products and resources between businesses and households in exchange for money payments. Flow must distinguished from stocks. Flows are measured in units per time period - for example, dollars per year. Stock is a quantity measured at one point in time. For example, an inventory of goods or the amount of money in a checking account. Initially, we assume that the economy is composed of only two sector, business and household. In this hypothetical economy the business sector is the sole producer of goods and services and production occurs by hiring the factor of production. The household owns all the factors of production (land, labour, capital and entrepreneur). The flow of factor of production is shown by the flow from the household to the firm. We further assume that household are the sole buyers of goods and services and that they spend their entire income. The upper half of the diagram in Figure 1 represents product markets, in which households exchange money for goods and services produced by firms. The supply arrow in the top loop represents all finished products and the value of services produced, sold, and delivered to consumers. The demand arrow in the top loop shows why the businesses make this effort to satisfy the consuming households. When consumers decide to buy products, they are actually voting with their dollars. This flow of consumption expenditures from households is sales revenues to businesses and expenses from the viewpoint of households. Notice that the box labeled product markets contains a supply and demand graph. Price and quantities in individual markets are determined by the market supply and demand model without government interference. The forces of supply and demand determine the returns to the factors, for example, wages and the quantity of labour supplied. The bottom half of the circular flow diagram consists of the factor markets, in which firms demand the natural resources, labour, capital, and entrepreneurship needed to produce the goods and services sold in the product markets. The supply arrow in the bottom loop represents this flow of resources from households to firms, and the demand arrow is the flow of money payments for these resources. These payments also income earned by households in the form of wages, rents, interest, and profits. In the factor market, resources (land, labour and capital) are owned by households and supplied to businesses that demand these factors in return for money payments. Businesses seek profits by supplying goods and services to households through the product markets. Businesses therefore must purchase all resources from the households.
What is the implication for free trade of the theory of comparative advantage?
Under the theory of comparative advantage two nations that each have a cost advantage in the production of a specific product would both benefit from free trade by selling to each other since the total output of both nation's products sold would increase. The mathematical theory of comparative advantage was formalized by David Ricardo in 1817 and hence became known as the "Ricardian model." Economists have long debated the usefulness of the comparative advantage model in the real world since it is counter-intuitive to many people due to the fact that the model is based on two countries producing only two goods and only one factor of production (such as labor). In addition, the model computes comparative cost advantages based on which nation produces goods at a lower opportunity cost which implies that a nation would have to forgo the production of other goods in order to achieve the lowest comparative advantage. Many economists and student of foreign trade prefer to use the theory of absolute advantage in production which is easy to understand since it is intuitive. Under the absolute advantage theory two countries that each produce a particular good at a much lower cost than the other would both become wealthier as they increased production to sell their goods to each other.
What results from the fact that a free market system is based on the free choices of consumers and producers?
There are several consequences. The most basic one is that because of this, the market produces all and only the products which are demanded by the consumers. However, it also leads to certain types of "market failures" notably existence of merit goods and demerit good. It also excludes public goods (roads/light houses) our of productions. In general terms, this arrangement makes the market as efficient as possible (has been proven historically until this point to be more efficient than centrally plannned economy.)
What is the Definition of trickle?
A trickle of water is when you notice only drops and not a steady flow of constant water
Why is circular flow model only a theory?
since there will be leakages from the circular flow
What atomic models depicts electrons moving only in specific circular orbits around a nucleus?
cloud model
Write a note on innovation theory of profit?
Prof. Schumpeter attributes profit to dynamic changes resulting from an innovation. To start with he takes a capitalist closed economy which is in a stationary equilibrium. This equilibrium is characterised by what Schumpeter calls a "circular flow" which continues to repeat itself for ever. In such a static state, there is perfectly competitive equilibrium. The price of each product just equals its cost of production and there is no profit. Only exogenous factors like whether conditions can cause changes in the circular flow position. In the circular flow position goods are being produced at a constant rate. This routine work is being performed by the salaried managers. It is the entrepreneur who disturbs the channels of this circular floe by the introduction of an innovation. Thus Schumpeter assigns the role of an innovator not to the capitalist but to the entrepreneur.
What does the alleged discovery of the higgs boson particle mean when applied to string theory?
It doesn't mean much. The Higgs Boson is only necessary for the Standard Model to be correct; the Standard Model excludes gravity, and String Theory is a theory of quantum gravity. The two are separate from one another.
Why inverse is called Circular function?
An inverse is NOT called a circular function. Only inverse functions that are circular functions are called circular functions for obvious reasons.
How high can model planes fly in meters?
The heights model aircraft fly is really only governed by how far their controllers can see. In theory they can fly thousand of meters high.
What is data model?
In computer science, data modeling is the process of creating a data model by applying a data model theory to create a data model instance. A data model theory is a formal data model description.For the source and more detailed information concerning your request, click on the related links section (Answers.com) indicated below.
How do you use a circular loom?
The same way you use a linear loom, only in a circular fashion.
How is the evolution theory only limited as a theory?
The word 'theory' means it is an explanatory framework for some set of observational data. As to your question: while there is an overwhelming amount of observational data supporting the general tenets of evolutionary theory, and it is now impossible to rationally reject these tenets, it will technically always remain an explanatory model - a theory.
The scientist who first used a telescope to make discoveries that supported the heliocentric model was?
Galileo Galilei . He only helped support the theory through his observations , he didn't invent the model, Copernicus did.
When was In Theory Only created?
In Theory Only was created in 1975.
Why is evolution reffered to as a theory?
I don't exactly know why evolutionists refer to it as a theory, but I do know this. A theory is an explanation or model based on observation, experimentation, and reasoning. According to the definition of a theory, evolution is not a theory. Evolution cannot be based on observation. No one was here to observe it. So evolution should be classified as a hypothesis not a theory. It is only a guess as to how things came about.
