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FINANCIAL MARKET: A market that trades financial assets. Financial assets are the legal claims on the real assets in our economy and include such notable items as corporate stocks and bonds, government securities, and money. Without financial markets our economy would find it almost impossible to accumulate the funds needed for investment in big, expensive capital projects.
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Lesson 13: The Firm | Unit 2: Objectives
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Page: 10 of 24
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Topic:
Natural Selection
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- If real world firms DON'T seek to maximize profit, then why do pointy-headed economists assume that firms DO seek to maximize profit when analyzing firm behavior?
- The answer lies with the concept of natural selection.
- Natural selection is the notion that firms best suited to the economic environment on the ones that tend to survive.
- It's probably true that individual firms do not consciously try to maximize profit.
- But it's also true that decisions the surviving firms make end up with the same results as if the firms DID consciously try to maximize profit.
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MARGINAL FACTOR COST CURVE A curve that graphically represents the relation between marginal factor cost incurred by a firm for hiring an input and the quantity of input employed. A profit-maximizing firm hires the quantity of input found at the intersection of the marginal factor cost curve and marginal revenue product curve. The marginal factor cost curve for a firm with no market control is horizontal. The marginal factor cost curve for a firm with market control is positively sloped and lies above the average factor cost curve.
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BLUE PLACIDOLA
[What's This?]
Today, you are likely to spend a great deal of time touring the new suburban shopping complex hoping to buy either a lazy Susan for you dining room table or a set of serrated steak knives, with durable plastic handles. Be on the lookout for rusty deck screws.
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Natural gas has no odor. The smell is added artificially so that leaks can be detected.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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LRMC
Long Run Marginal Cost
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