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PREFERENCES: One of the five demand determinants assumed constant when a demand curve is constructed, and that shift the demand curve when they change. The other four are income, other prices, buyers' expectations, and number of buyers. This determinant comes directly form the WILLINGNESS aspect of demand. Before you can have a demand for a good, you must be willing to have the good, you must have a preference for it. In general, if buyers have a greater preference for a good, then they buy more of the good.
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Lesson 18: Monopoly | Unit 5: Regulation
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Page: 27 of 30
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- Because a monopoly has market control, is a price maker, and faces a negatively-sloped demand curve:
- The price charged is too high.
- The quantity of output produced is too small.
- The result of this inefficiency is that too few resources are allocated to the production of the monopoly output.
- This inefficiency is a problem. In fact, it's generally considered one of four basic market failures.
- Market failure is a condition, including public good, market control, externality, and imperfect information, in which a market does not efficiently allocate resources.
- The general recommendation for any market failure is government intervention:
- Antitrust Laws
- Regulatory Pricing
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AGGREGATE DEMAND INCREASE, LONG-RUN AGGREGATE MARKET A shock to the long-run aggregate market caused by an increase in aggregate demand resulting in and illustrated by a rightward shift of the aggregate demand curve. An increase in aggregate demand in the long-run aggregate market results in an increase in the price level but no change in real production. The level of real production resulting from the aggregate demand shock is full-employment real production.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time at a dollar discount store looking to buy either a remote controlled World War I bi-plane or a wall poster commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki. Be on the lookout for infected paper cuts.
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This isn't me! What am I?
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Lombard Street is London's equivalent of New York's Wall Street.
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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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PSID
Panel Study of Income Dynamics
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