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SLOPE, AGGREGATE EXPENDITURES LINE: The positive slope of the aggregate expenditures line is the sum of the marginal propensity to consume (MPC), marginal propensity to invest (MPI), and marginal propensity for government purchases (MPG), less the marginal propensity to import (MPM). This slope is greater than zero but less than one, reflecting induced expenditures by the four macroeconomic sectors (household, business, government, and foreign). The slope of the aggregate expenditures line determines the magnitude of the multiplier process.

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Lesson 14: Production | Unit 3: Product Curves Page: 14 of 25

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  • How total, average, and marginal product react to changes in the variable input is determined by the law of diminishing marginal returns:

    MP curve

    • Note the "hump-shape" of the curve, with increasing marginal product followed by decreasing then negative marginal product.
    • The negatively-sloped portion of the curve is due to the law of diminishing marginal returns.

    TP curve

    • Note that marginal product is the slope of the TP curve.

    AP curve

    • Marginal product and average product are related by the average-marginal rule, which applies to the averages and marginals for any given variable.

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PERFECT COMPETITION, CHARACTERISTICS

The four key characteristics of perfect competition are: (1) a large number of small firms, (2) identical products sold by all firms, (3) perfect resource mobility or the freedom of entry into and exit out of the industry, and (4) perfect knowledge of prices and technology.

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APLS

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Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors looking to buy either a coffee cup commemorating the first day of winter or a video game player. Be on the lookout for malfunctioning pocket calculators.
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The earliest known use of paper currency was about 1270 in China during the rule of Kubla Khan.
"Experience keeps a dear school, but fools will learn in no other. "

-- Benjamin Franklin

LBO
Leveraged Buyout
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