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| '''Income''', generally defined, is the money that is received as a result of the normal business activities of an individual or a business. For example, most individuals' income is the cash they receive from their regular paychecks. | |||
| In business and ], '''income''' (also known as '']'' or ''earnings'') is, more specifically, the amount of money that a company earns after considering all its costs. To calculate a company's income, it starts with its amount of ], deducts all costs, including ], and the number that results is its income, which may be a negative number. | |||
| ⚫ | The distribution of income within a society can be measured by the ] and the ]. | ||
| 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. Here, <tt>Px/Py</tt> is known as 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. Here, <tt>Px/Py</tt> is known as the rate of substitution. Secondly, if the price of x changes, then the rate of substitution changes. This causes demand curves to slope down. | ||
| ⚫ | The distribution of income within a society can be measured by the ] and the ]. | ||
| '''National income''', measured by statistics such as the ''] (GNP)'', measures the total income of all individuals in the economy. For more information see ]. | '''National income''', measured by statistics such as the ''] (GNP)'', measures the total income of all individuals in the economy. For more information see ]. | ||
Revision as of 19:24, 19 November 2003
Income, generally defined, is the money that is received as a result of the normal business activities of an individual or a business. For example, most individuals' income is the cash they receive from their regular paychecks.
In business and accounting, income (also known as profit or earnings) is, more specifically, the amount of money that a company earns after considering all its costs. To calculate a company's income, it starts with its amount of revenue, deducts all costs, including depreciation, and the number that results is its income, which may be a negative number.
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. Here, Px/Py is known as the rate of substitution. Secondly, if the price of x changes, then the rate of substitution changes. This causes demand curves to slope down.
The distribution of income within a society can be measured by the Lorenz curve and the Gini coefficient.
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.
See: poverty level