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 AD CURVE: The aggregate demand curve, which is a graphical representation of the relation between aggregate expenditures on real production and the price level, holding all ceteris paribus aggregate demand determinants constant. The aggregate demand, or AD, curve is one side of the graphical presentation of the aggregate market. The other side is occupied by the aggregate supply curve (which is actually two curves, the long-run aggregate supply curve and the short-run aggregate supply curve). The negative slope of the aggregate demand curve captures the inverse relation between aggregate expenditures on real production and the price level. This negative slope is attributable to the interest-rate effect, real-balance effect, and net-export effect.
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 Lesson 11: Elasticity Basics | Unit 2: A Little More Page: 8 of 25

 Topic: Why Study: Taxes <=PAGE BACK | PAGE NEXT=>

• Governments levy taxes for two reasons:

1. Revenue Generation: To collect the revenue needed to operate and to provide public goods.
2. Resource Allocation: To change the allocation of resources and to alter the production and consumption of specific goods.

• Elasticity determines how effectively a tax achieves it's desired goal.

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MARGINAL REVENUE, PERFECT COMPETITION

The change in total revenue resulting from a change in the quantity of output sold. Marginal revenue indicates how much extra revenue a perfectly competitive firm receives for selling an extra unit of output. It is found by dividing the change in total revenue by the change in the quantity of output. Marginal revenue is the slope of the total revenue curve and is one of two revenue concepts derived from total revenue. The other is average revenue. To maximize profit, a perfectly competitive firm equates marginal revenue and marginal cost.

 GRAY SKITTERY[What's This?] Today, you are likely to spend a great deal of time at a going out of business sale looking to buy either a computer that can play video games and burn DVDs or a black duffle bag with velcro closures. Be on the lookout for spoiled cheese hiding under your bed hatching conspiracies against humanity.Your Complete Scope
 The first "Black Friday" on record, a friday marked by a major financial catastrophe, occurred on September 24, 1869 -- A FRIDAY -- when an attempted cornering of the gold market induced a financial crises and economy-wide depression.
 "Work is an extension of personality. It is achievement. It is one of the ways in which a person defines himself, measures his worth ‚ and his humanity. "-- Peter Drucker, author
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