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OLIGOPOLY AND MONOPOLISTIC COMPETITION: Oligopoly and monopolistic competition have some similarities, but also have a few important differences. Both are examples of imperfect competition on the market structure continuum between ideals of perfect competition and monopoly. However, oligopoly contains a small number of large firms and monopolistic competition contains a large number of small firms. The dividing line between oligopoly and monopolistic competition can be blurred due to the number of firms in the industry.
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Lesson 12: Elasticity and Demand | Unit 5: Other Measures
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Page: 23 of 25
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Topic:
Income Elasticity Of Demand
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- How responsive is my demand to this change in my income? To answer these questions, we need the income elasticity of demand.
- Income elasticity of demand is the relative response of demand to changes in income.
- Or stated in percentage terms: the income elasticity of demand is the percentage change in demand resulting from a percentage change in buyers' income.
- For a normal good, income elasticity is positive, meaning that an increase in income leads to an increase in demand.
- For an inferior good, income elasticity is negative, meaning that an increase in income leads to a decrease in demand.
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TWO-SECTOR KEYNESIAN MODEL A Keynesian model of the macroeconomy that includes the two private sectors, the household sector and the business sector. This Keynesian model variation, often termed the basic Keynesian model or the private sector Keynesian model, captures the interaction between induced consumption expenditures and autonomous investment expenditures. This model is commonly used to illustrate the basic workings of Keynesian economics, including equilibrium, disequilibrium, and the multiplier. Equilibrium is identified as the intersection between the C + I line and the 45-degree line. Two related variations are the three-sector Keynesian model and the four-sector Keynesian model.
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Three-forths of the gold mined each year is used to manufacture jewelry.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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MP
Marginal Product
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