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PERFECT COMPETITION: An ideal market structure characterized by a large number of small firms, identical products sold by all firms, freedom of entry into and exit out of the industry, and perfect knowledge of prices and technology. This is one of four basic market structures. The other three are monopoly, oligopoly, and monopolistic competition. Perfect competition is an idealized market structure that's not observed in the real world. While unrealistic, it does provide an excellent benchmark that can be used to analyze real world market structures. In particular, perfect competition efficiently allocates resources.
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Lesson 12: Elasticity and Demand | Unit 5: Other Measures
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Page: 24 of 25
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Topic:
Cross Elasticity Of Demand
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- How responsive is my demand to this change in my other prices? To answer these questions, we need the cross elasticity of demand.
- Cross elasticity of demand is the relative response of the demand for one good to changes in the price of another good.
- Or stated in percentage terms: the cross elasticity of demand is the percentage change in demand for one good resulting from a percentage change in the price of another good.
- The cross elasticity of demand is a handy numerical measure commonly used by economists to identify complement and substitute goods:
- For a substitute good, cross elasticity is positive, meaning that an increase in the price of one good leads to an increase in demand for the other good.
- For an complement good, cross elasticity is negative, meaning that an increase in the price of one good leads to a decrease in demand for the other good.
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LONG-RUN AGGREGATE MARKET A macroeconomic model relating the price level and real production under the assumption that ALL prices are flexible. This is one of two aggregate market submodels used to analyze business cycles, gross production, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The other is the short-run aggregate market. The long-run aggregate market isolates the interaction between aggregate demand and long-run aggregate supply. The key assumption of this model is that ALL prices, especially resource prices, are flexible. The primary result of this model is that the economy achieves long-run equilibrium at full-employment real production.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time browsing through a long list of dot com websites wanting to buy either a rim for your spare tire or decorative celebrity figurines. Be on the lookout for attractive cable television service repair people.
Your Complete Scope
This isn't me! What am I?
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One of the largest markets for gold in the United States is the manufacturing of class rings.
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"Never confuse a single defeat with a final defeat." -- F. Scott Fitzgerald, writer
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EFTS
Electronic Fund Transfer Systems
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