LWEO

chapter 1

chapter 1

Households

In this chapter you get to know the households at Park Road. You will meet the residents of Park Road several times in this lesson. Next we devote attention to the concept of households in an economic sense and look at the ways in which households obtain money. The families are rewarded for the deployment of the factors of production labour, capital, nature and entrepreneurship in the enterprise. The income distribution among the different factors of production is called the income distribution according to certain categories. Apart from study or labour there is leisure time. The importance of leisure time and the satisfaction of pupils with their leisure time will come up next. By means of a budget line we can look further at the conversion of work into leisure time. Working more means less leisure time, but more income.

Using the participation rate or labour participation rate we can see whether the number of people working in relation to the population between 15 and retirement age increases or decreases.

This chapter introduces several skills that you need to master for the subject of economics, such as calculating, making and interpreting graphs, reading tables, processing information and conducting research.

links
Calculation tips (www.beterrekenen.nl)

glossary

Glossary chapter 1

budget line
A budget line indicates different combinations of two spending options for a certain budget.
capital
The factor of production capital comprises the buildings, machinery, all the goods that are used in the production. We distinguish real capital (= capital goods) and monetary capital.
capital goods
Synonym: capital.
entrepreneurship
A factor of production that is paid for bearing the economic risks that arise by combining the other factors of production (labour, nature, capital).
factors of production
The means that are used to produce, notably labour, entrepreneurship, capital (goods) and nature and natural resources.
household
A unit that takes economic decisions independently.
income distribution according to categories
The distribution of incomes across the categories wage (payment for labour), interest/rent (payment for capital), lease (payment for nature) and profit (payment for entrepreneurship).
labour
A factor of production that includes all the physical and mental efforts of people that are available for being used in the production process.
nature
A factor of production that comprises everything not produced by people, such as the land, but also sunlight and heat and natural resources.
other income ratio
The sum of the payment for capital (interest/rent), nature (lease) and entrepreneurship (profit) expressed as a percentage of the national income.
participation rate
The percentage that indicates which percentage of the population from 15 years old to the retirement age works or wants to work.
pocket money
Money that children get from their caregivers every week or month without doing something in return.
primary income
The income that is earned in the production process. Examples: wage, interest, rent, lease and profit.
transfer incomes
Transfer incomes is income that you receive without making a contribution to the production, for example social benefits.
wage ratio
Wage expressed as a percentage of the national income.