A question for you econ monkeys

[etalns]

I am stumped by this question.

"True, false, or uncertain."

"The owner of College Variety is the only one who works in his store. Therefore College Variety does not purchase any labour in the facotr markets."

I said that is false, because they still buy the labour of the owner. Would that be correct? Because he could do another job.

 

[jarfykk]

Labor markets are typically made up of laborers, not owners. This goes to the typical management v. labor dynamic. However when using various metrics to measure "labor" it may or may not include the time of the owner. Depends on whether you are approaching it from a market, accounting, or finance perspective, as well as the internal working of said company. Basically, I'd have put uncertain, though it will depend on what level of economics this class is.

Go read your textbook, I'm sure they point it out somewhere.

 

[etalns]

Originally posted by: jarfykk
Labor markets are typically made up of laborers, not owners. This goes to the typical management v. labor dynamic. However when using various metrics to measure "labor" it may or may not include the time of the owner. Depends on whether you are approaching it from a market, accounting, or finance perspective, as well as the internal working of said company. Basically, I'd have put uncertain, though it will depend on what level of economics this class is.

Go read your textbook, I'm sure they point it out somewhere.

It's first year econ.

Unfortunately it's not mentioned in the TB

I have been looking at the circular flow of income and expenditure. I have been thinking that it is wrong, because College Variety would be considered a firm, would it not? So they are essentially buying that labour, because the owner is being paid to work there.

 

[Biggerhammer]

I'n neither an econ major nor a simian but what I remember from those classes was that the owner was working, therefore he is dealing with labor.

I don't know what the facotr markets are, though... typo?

 

[etalns]

Bump

Facotr markets was meant to be factor markets.

 

[Mail5398]

I would say the OP is correct.

 

[etalns]

Any other opinions?

 

[dug777]

Nope, not labour, he's an entrepreneur therefore he's K iirc...paid no wages etc...

ahh i forget, but i'm pretty sure that he doesn't count as labour, the mere presence of opportunity cost in working there doesn't make this the case...

 

[RadioHead84]

i am no econ major but i took both macro and micro.


I would say the OP is right and it is false.

Sounds like a trick question tho.

 

[miketheidiot]

Originally posted by: dug777
Nope, not labour, he's an entrepreneur therefore he's K iirc...paid no wages etc...

ahh i forget, but i'm pretty sure that he doesn't count as labour, the mere presence of opportunity cost in working there doesn't make this the case...

i agree

<---- econ major

 

[etalns]

Originally posted by: miketheidiot

Originally posted by: dug777
Nope, not labour, he's an entrepreneur therefore he's K iirc...paid no wages etc...

ahh i forget, but i'm pretty sure that he doesn't count as labour, the mere presence of opportunity cost in working there doesn't make this the case...

i agree

<---- econ major

But isn't one of the factors of production entreprenurial ability? and based on the circular flow of income and expenditure, that would be one of the factor services which companies pay for.

It's an unorthadox way of purchasing labour, but isn't the money he takes home at the end of the year ultimately his payment for his factor services? and therefore the companies purchase from the labour market?

 

[miketheidiot]

Originally posted by: Qosis

Originally posted by: miketheidiot

Originally posted by: dug777
Nope, not labour, he's an entrepreneur therefore he's K iirc...paid no wages etc...

ahh i forget, but i'm pretty sure that he doesn't count as labour, the mere presence of opportunity cost in working there doesn't make this the case...

i agree

<---- econ major

But isn't one of the factors of production entreprenurial ability? and based on the circular flow of income and expenditure, that would be one of the factor services which companies pay for.

It's an unorthadox way of purchasing labour, but isn't the money he takes home at the end of the year ultimately his payment for his factor services? and therefore the companies purchase from the labour market?

the money he takes home at the end of the year is profit, not wages.

 

[dug777]

Originally posted by: Qosis

Originally posted by: miketheidiot

Originally posted by: dug777
Nope, not labour, he's an entrepreneur therefore he's K iirc...paid no wages etc...

ahh i forget, but i'm pretty sure that he doesn't count as labour, the mere presence of opportunity cost in working there doesn't make this the case...

i agree

<---- econ major

But isn't one of the factors of production entreprenrurial ability? and based on the circular flow of income and expenditure, that would be one of the factor services which companies pay for.

It's an unorthadox way of purchasing labour, but isn't the money he takes home at the end of the year ultimately his payment for his factor services? and therefore the companies purchase from the labour market?

in his situation he IS the company if you like (and as such will be legally one and the same as it IIRC if my corporations law is still up to scratch)...

check it with your lecturer, but i'm pretty sure we're right here. I would say capital gain (assuming the company grows) would be his reward for the risk taking, not a wage as such...

 

[etalns]

Just one note, all these answers have to be based on economic principles, not common sense. So while we may say that he takes the profit of the company home at the end of the year (as a result of common sense), wouldn't economic principles tell us that any payments that go to individuals that provide factor services to the company are payments for the factor services?

 

[dug777]

Originally posted by: Qosis
Just one note, all these answers have to be based on economic principles, not common sense. So while we may say that he takes the profit of the company home at the end of the year (as a result of common sense), wouldn't economic principles tell us that any payments that go to individuals that provide factor services to the company are payments for the factor services?

all my answers are based on econ principles...since i have an econs major too

 

[DaWhim]

answer would be false.

the ownder is self-employed, so why is he not count as labor? he also creates economic profits.