Individuals, firms, markets and market failure (7136)
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7 Distribution of Income and Wealth
03 January 2023 12:52
7.1 The distribution of income and wealth
Income Flow of money to a factor of production (labour)
Wealth Stock of assets e.g. property/shares
Distribution of income How income is shared out between the population
Factors influencing the distribution of income
1. Differences in skills, qualifications and work experience: more skills in high demand = higher earning
2. Differences in wealth: wealthier individuals earn more income from assets in the form of dividends and interest
3. Impact of the state: free market provides fewer welfare benefits than a command economic system
Factors leading to an unequal distribution of wealth
Micro Paper 1 - Markets and Market failure Page 1
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