March 17, 2018 

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ELASTIC: In general, if changes in variable A cause changes in variable B, then the relative change in B is greater than the relative change in A. In other words, small changes in variable A cause relatively larger changes in variable B. An elastic relationship between two variables is a very responsive, or stretchable, relationship. You should compare elastic with inelastic.

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Lesson 8: Market Shocks | Unit 3: Single Shifts Page: 10 of 20

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The six steps for an increase in supply:
  • A determinant changes. The price of ice cream, a key resource input for hot fudge sundaes, declines.
  • A curve to shifts. The supply curve for hot fudge sundaes shifts rightward.
  • A shortage or a surplus occurs. The increase in supply causes a surplus of hot fudge sundaes.
  • The price changes. The price of hot fudge sundaes goes down.
  • The quantities demanded and supplied change. The quantity supplied for hot fudge sundaes decreases while their quantity demand is increased.
  • The market imbalance is eliminated and equilibrium is restored. The surplus of hot fudge sundaes is eliminated. The price is lower and the quantity exchanged is more.

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A market structure characterized by a large number of small firms, similar but not identical products sold by all firms, relative freedom of entry into and exit out of the industry, and extensive knowledge of prices and technology. This is one of four basic market structures. The other three are perfect competition, monopoly, and oligopoly. Monopolistic competition approximates most of the characteristics of perfect competition, but falls short of reaching the ideal benchmark that IS perfect competition. It is the best approximation of perfect competition that the real world offers.

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Today, you are likely to spend a great deal of time at a crowded estate auction trying to buy either a coffee cup commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki or a rechargeable battery for your cell phone. Be on the lookout for malfunctioning pocket calculators.
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One of the largest markets for gold in the United States is the manufacturing of class rings.
"If football taught me anything about business, it is that you win the game one play at a time."

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