Final answer:
The concept of 'earned income' refers to money received from performing work, such as wages or salaries. Among the provided options, Bill's income of $800 from lawn care services is an example of earned income because it comes from labor. Other forms of income like interest, dividends, or capital gains are not considered earned. b. Patsy received $200 in dividends from stock that she owns.
Step-by-step explanation:
Earned income refers to money received as a result of work performed. This includes incomes such as wages, salaries, commissions, and tips. It is contrasted with unearned income which comes from sources like interest, dividends, and capital gains from investments. In this scenario, Bill received $800 over the summer doing lawn care services for his neighbors is the correct answer because it is the only option where income is earned by providing labor, which is a factor of production with an associated factor payment in a market economy.
In the United States, most people generate income through their labor. This payment for labor can depend on several factors, such as the number of hours worked and the wage rate offered by the employer. On the other hand, some individuals may earn money through ownership of assets like real estate, which can be used by themselves or rented out, or through financial assets such as bank accounts, stocks, and bonds that yield interest and dividends. However, this form of income is considered unearned because it doesn't directly result from the individual's labor.
Referring to the provided information, Ellen's interest from a checking account, Patsy's dividends from stocks, and Arnold's profit from selling land are examples of unearned income. Therefore, only Bill's active labor that resulted in income qualifies as earned income.