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LONG-RUN AVERAGE COST CURVE: A curve depicting the per unit cost of producing a good or service in the long run when all inputs are variable. The long-run average cost curve (usually abbreviated LRAC) can be derived in two ways. On is to plot long-run average cost, which is, long-run total cost divided by the quantity of output produced. at different output levels. The more common method, however, is as an envelope of an infinite number of short-run average total cost curves. Such an envelope is base on identifying the point on each short-run average total cost curve that provides the lowest possible average cost for each quantity of output. The long-run average cost curve is U-shaped, reflecting economies of scale (or increasing returns to scale) when negatively-sloped and diseconomies of scale (or decreasing returns to scale) when positively sloped. The minimum point (or range) on the LRAC curve is the minimum efficient scale.
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                           GOVERNMENT SUBSIDIES: Transfer payments from the government sector to the business sector that do not involve current production. This is one component of the official entry government subsidies less current surplus of government enterprises found in the National Income and Product Accounts maintained by the Bureau of Economic Analysis that separates national income (the resource cost of production) and gross (and net) domestic product (the market value of production). Much like government makes transfers to the household sector to assist (presumably needy) individuals, government makes transfers to the business sector to assist (presumably needy) firms. Household transfer payments include welfare to the poor, unemployment compensation to the unemployed, and Social Security payments to the elderly and disabled. Business transfer payments (occasionally referred to as corporate welfare) include direct payments or tax deductions to business firms for a variety of reasons.- Specific Activity: Firms are often given subsidies to encourage particular actions, such as training employees, reducing pollution, implementing specific production techniques, or developing new technologies. Farmers receive federal subsidies to reduce the problems caused by unstable agricultural markets.
- Local Growth: State and local governments have a long history of inducing firms that employ a number of workers to locate in their areas through generous subsidies.
- Public Utilities: Privately-owned public utilities or quasi-public transportation systems are often subsidized by the government because they provide valuable production that cannot be profitably exchanged through markets.
- Bankrupt Firms: On occasion, a nationally prominent firm on the verge of bankruptcy is subsidized to help it through difficult times.
- Friends of Government: And more than a few special "breaks" have been inserted into tax laws by members of Congress on behalf of a particular firm that may or may not be the direct result of a hefty campaign contribution.
From a national income perspective, government subsidies are added to the pool of revenue that the business sector has available for making factor payments (which also makes it part of national income). But because the business sector does NOT receive this revenue as payment for producing goods, it is not part of gross domestic product.
Recommended Citation:GOVERNMENT SUBSIDIES, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: January 22, 2022].
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Today, you are likely to spend a great deal of time calling an endless list of 800 numbers looking to buy either a box of multi-colored, plastic paper clips or several orange mixing bowls. Be on the lookout for broken fingernail clippers.
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Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.
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"Now is the only time there is. Make your now wow, your minutes miracles, and your days pay. Your life will have been magnificently lived and invested, and when you die you will have made a difference." -- Mark Victor Hansen
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AOM
Australian Options Market
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