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USA National Standards for Concept "Income Distribution"

NATIONAL STANDARD 13 - INCOME: Students will understand that: Income for most people is determined by the market value of the productive resources they sell. What workers earn primarily depends on the market value of what they produce.

Students will be able to use this knowledge to: Predict future earnings based on their current plans for education, training, and career options.

In a market economy, wages and salaries the prices of labor services are determined just as other prices are, by the interaction of buyers and sellers. The buyers of labor services are employers. They are willing to pay higher wages and salaries to those employees who can produce more or better goods or services in a given amount of time. Students who understand this will appreciate the value of the skills they can acquire by completing high school, and perhaps college or a vocational training program.

Understanding the forces affecting wages and other sources of income will be increasingly important in the future, when workers may change employers and careers more often than in the past. Regardless of the occupations or industries in which today's students eventually work, they are likely to find that they will have to continue their education and training to maintain or increase their earnings.

You can find additional online lessons on US Standard 13 from the Council for Economic Education Website.

NATIONAL STANDARD 16 - ROLE OF GOVERNMENT AND MARKET FAILURE: Students will understand that: There is an economic role for government in a market economy whenever the benefits of a government policy outweigh its costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Most government policies also have direct or indirect effects on peoples? incomes.

Students will be able to use this knowledge to: Identify and evaluate the benefits and costs of alternative public policies, and assess who enjoys the benefits and who bears the costs.

Why does government pay private construction firms to build roads and highways? Why do the firms that build the roads not own them themselves and charge tolls to users? All kinds of goods and services are produced and distributed through private markets, so why not roads and highways, too? In flipping through the pages of the telephone directory, we observe a vast array of businesses and government agencies. Why do markets work well to supply much of what we want, while failing to produce other things we want?

Citizens should understand the limitations and shortcomings of markets and how some government policies attempt to compensate for market failures. Learning the economic as well as the political and social reasons for public sector services helps citizens make better choices about the appropriate size and scope of markets and government. It is also important that students be able to evaluate redistributive effects of government programs.

You can find additional online lessons on US Standard 16 from the Council for Economic Education Website.