Purchase Solution

Resource transfers

Not what you're looking for?

Ask Custom Question

In order to maximize society's happiness, we must free up resources which are in lower valued uses and allow them to go to higher valued uses.

1) Explain and elaborate on this concept.
2) How can this concept be applied to the activities of profit making companies and profit loosing companies or to the revenue and costs components of a firm's net profit?
3) Does this mean every activity that loses money decreases society's happiness, and any activity that makes money increases society's happiness?
4) How can this concept be applied to the "welfare gains from trade" concept in international trade ?

Need detailed explanations/write-up please.

Purchase this Solution

Solution Summary

The solution discusses resource transfers from the given information.

Solution Preview

Because resources are limited, they need to be carefully allocated. If we use them inefficiently, we reduce our ability to provide for everyone's needs and wants. How we value the different uses can be difficult, because it is a normative judgement. We must infer some kind of subjective criteria. We generally put food for hungry children before such things as vacations and luxury cars. But that is really a moral judgment the the majority subscribe to in this culture. In a different culture, other things may be valued.

When a company is losing money, it is a signal from the market that the goods its producing aren't worth what it costs to make them. This is a method of ...

Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.