Google
Saturday 
November 26, 2022 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
INCREASING RETURNS TO SCALE: A given proportionate increase in all resources in the long run results in a proportionately greater increase in production. Increasing returns to scale exists if a firm increases ALL resources -- labor, capital, and other inputs -- by 10%, and output increases by more than 10%. You might want to compare decreasing returns to scale and constant returns to scale.

Visit the GLOSS*arama


INVOLUNTARY EXCHANGE:

The process of unwillingly trading one valuable commodity (good, service, or resource) for another, usually prompted by the coercive powers of government. The key term is "unwillingly," which distinguishes involuntary exchanges from voluntary exchanges, such as those that are the foundation of market transactions.
Involuntary exchanges are resource allocation activities imposed on the economy by government taxes, laws, and regulations. Unlike a voluntary market exchange, the "buyers" and "sellers" have little or no influence over the allocation decision. They pay the price, produce the good, or use the resources according to government mandates.

An Involuntary Exchange

Suppose, for example, that the Shady Valley City Commission imposes a 1 cent sales tax on all jogging shoes sold in the city. When Roland Nottingham buys a pair of jogging shoes for $75, the city collects 75 cents in sales taxes. The Shady Valley City Commission then decides to use this tax revenue, along with that collected from other jogging shoe sales, to erect a statue memorializing the career of former Mayor, Sylvester J. Peabody.

Roland is thus involuntarily forced to exchange his 75 cents for a portion of the Sylvester J. Peabody statue. This is a resource allocation decision that Roland would not have undertaken voluntarily. Roland did not like Mayor Sylvester J. Peabody. Roland did not like the political views held by Mayor Sylvester J. Peabody. Roland did not like any policy, program, or ordinance proposed by Mayor Sylvester J. Peabody. Roland would not have voluntarily paid for any part of a statue memorializing the career Mayor Sylvester J. Peabody.

But, as a taxpaying citizen of Shady Valley, Roland is forced to abide by the involuntary exchange imposed on him by the Shady Valley government.

<= INVISIBLE HAND


Recommended Citation:

INVOLUNTARY EXCHANGE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: November 26, 2022].


Check Out These Related Terms...

     | voluntary exchange | exchange | market |


Or For A Little Background...

     | allocation | three questions of allocation | efficiency | public sector | government functions |


And For Further Study...

     | private sector | capitalism | ownership and control | paternalism | political views | market | market equilibrium |


Search Again?

Back to the WEB*pedia


APLS

PURPLE SMARPHIN
[What's This?]

Today, you are likely to spend a great deal of time at an auction wanting to buy either a small palm tree that will fit on your coffee table or several magazines on fashion design. Be on the lookout for crowded shopping malls.
Your Complete Scope

This isn't me! What am I?

The first "Black Friday" on record, a friday marked by a major financial catastrophe, occurred on September 24, 1869 -- A FRIDAY -- when an attempted cornering of the gold market induced a financial crises and economy-wide depression.
"There is more to life than increasing its speed. "

-- Mohandas Gandhi, activist

WPI
Wholesale Price Index
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2022 AmosWEB*LLC
Send comments or questions to: WebMaster