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| In ] income is the constraint to unlimited ] purchases. Consumers can purchase a limited number of goods. The basic equation for this is <tt>I = Px*x+Py*y</tt> where <tt>Px</tt> is the price of good x, <tt>x</tt> is the quantity of good x, and I is the income (Py and y are similar to Px and x). If you need to examine more than two goods, you can add more on. This equation tells us two things. First, if you buy one more of good x, you get <tt>Px/Py</tt> less of good y. This is the rate of substitution. Secondly, if the price of x changes, then the rate of substitution changes. This causes demand curves to slope down. | In ] income is the constraint to unlimited ] purchases. Consumers can purchase a limited number of goods. The basic equation for this is <tt>I = Px*x+Py*y</tt> where <tt>Px</tt> is the price of good x, <tt>x</tt> is the quantity of good x, and I is the income (Py and y are similar to Px and x). If you need to examine more than two goods, you can add more on. This equation tells us two things. First, if you buy one more of good x, you get <tt>Px/Py</tt> less of good y. This is the rate of substitution. Secondly, if the price of x changes, then the rate of substitution changes. This causes demand curves to slope down. | ||
| '''National income''', measured by statistics such as the ''Gross National Product (GNP)'' measures the total income of all individuals in the economy. For more information see ]. | |||
Revision as of 15:25, 11 June 2002
Income is a fundamental concept in economics and acounting. Income is defined as... someone insert definition of income
The distribution of income within a society can be measured by the Lorenz curve and the Gini coefficent.
In economics income is the constraint to unlimited consumer purchases. Consumers can purchase a limited number of goods. The basic equation for this is I = Px*x+Py*y where Px is the price of good x, x is the quantity of good x, and I is the income (Py and y are similar to Px and x). If you need to examine more than two goods, you can add more on. This equation tells us two things. First, if you buy one more of good x, you get Px/Py less of good y. This is the rate of substitution. Secondly, if the price of x changes, then the rate of substitution changes. This causes demand curves to slope down.
National income, measured by statistics such as the Gross National Product (GNP) measures the total income of all individuals in the economy. For more information see measures of national income.