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Monthly ArchiveNovember 2017

Tax Cuts Outcomes

Tax Cuts Outcomes

Clarity on the winners and losers of the Republican tax cuts is important for taxpayers, because it signals what legislators aim to accomplish and the effects of the tax cuts on them. Tax cuts reduce government revenue and if government spending is not reduced by the same amount of the tax cuts, the deficit increases. When the government deficit increases, it crowds out private investments because the government has to borrow to cover expenses. Additionally, if the government reduces spending to accommodate the tax cuts, private sector suppliers of goods and services, as well as their employees, social security beneficiaries and so on will be adversely affected.

Understanding Profit and its Components

Understanding Profit and its Components

Profit is the difference between revenue and cost, where revenue is the selling price times the number of items sold, and cost is the sum of wages paid to inputs of the production process and it includes fixed cost. Businesses maximize profits by increasing revenue or reducing cost, or doing both. Thus, it is important to understand the components of profit: revenue and cost as well as their subcomponents. The production function for a firm is a technological relationship between inputs, such as capital, labor and materials; it determines the level and quality of outputs. Many production functions, however, lack best available technologies (BAT) and are unable to optimize output.