Determinants of the profit rate are the output price, the materials cost per unit of output, and the labor cost per unit of output. The government can alter the profit rate by implementing a law that requires companies to use ecologically friendly materials, which will increase the materials cost per unit of output. The profit rate can also be affected if the government decides to increase the minimum wage, which may oblige companies to increase wages. The third way the government can influence the profit rate is by encouraging entrepreneurship through loans and grant programs. The more firms enter the market, the more competitive it becomes, so firms will have to decrease the price of output to attract customers, thus minimizing the profit rate.
Give examples of ways in which the government can alter each determinant of the profit rate.
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Academic.Tips. (2021) 'Give examples of ways in which the government can alter each determinant of the profit rate'. 18 September.
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Academic.Tips. (2021, September 18). Give examples of ways in which the government can alter each determinant of the profit rate. https://academic.tips/question/give-examples-of-ways-in-which-the-government-can-alter-each-determinant-of-the-profit-rate/
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Academic.Tips. 2021. "Give examples of ways in which the government can alter each determinant of the profit rate." September 18, 2021. https://academic.tips/question/give-examples-of-ways-in-which-the-government-can-alter-each-determinant-of-the-profit-rate/.
1. Academic.Tips. "Give examples of ways in which the government can alter each determinant of the profit rate." September 18, 2021. https://academic.tips/question/give-examples-of-ways-in-which-the-government-can-alter-each-determinant-of-the-profit-rate/.
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Academic.Tips. "Give examples of ways in which the government can alter each determinant of the profit rate." September 18, 2021. https://academic.tips/question/give-examples-of-ways-in-which-the-government-can-alter-each-determinant-of-the-profit-rate/.
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"Give examples of ways in which the government can alter each determinant of the profit rate." Academic.Tips, 18 Sept. 2021, academic.tips/question/give-examples-of-ways-in-which-the-government-can-alter-each-determinant-of-the-profit-rate/.