Many Observers of the American Class Structure Have Suggested That

question 103

Essay

Many observers of the American class structure have suggested that over the past decade or more there has been a polarization of wealth and income that has divided the country between the "haves" and the "have-nots." From what you have learned from this reading and in class lecture, explain three (3) factors that have led to the wider disparity between income groups in the United States.

Understand the impact of variable and fixed costs on company profits and break-even point.

Learn to analyze the effects of cost structure on business risk and income variability.

Understand the relationship between fixed expenses, margin of safety, and profit.

Comprehend the concept and calculation of the break-even point.

---

Definitions:

Velocity

The rate at which money circulates within an economy, often measured as the ratio of nominal GDP to the money supply.

Price Level

An index that measures the average relative level of prices of goods and services in an economy over a period of time.

Inflation

The speed at which the overall price level for goods and services increases, thereby diminishing the buying power.

Shoeleather Costs

The resources wasted when inflation encourages people to reduce their money holdings.