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ABSOLUTE ADVANTAGE: The general ability to produced more goods using fewer resources. This idea of absolute advantage is important for trading that occurs between both people and nations. A nation can get an absolute advantage from an advanced level of technology or higher quality resources. For a person, an absolute advantage can result from natural abilities or the acquisition of human capital (education, training, or experience).
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Lesson 20: Oligopoly | Unit 4: Analysis
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Page: 18 of 24
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Topic:
Collusion Output
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- By combining their productive capabilities -- that is, their marginal cost curves -- the firms can now reach a profit-maximizing output.
- This is the same output level that would be reach if monopoly controlled the soft-drink market.
- The two firms maximize total industry profit by producing the quantity of output in which the marginal cost of each firm is equal to the marginal revenue for the overall market.
- A Little Cheating: Consider either firm's predicament. Both can increase profit by increasing production.
- However, under the collusion agreement, each firm can do a little better if they increase production -- so long as the other firms maintain the agreement and the higher price.
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OVEREMPLOYMENT The condition in which resources are more actively engaged in the production of goods and services than they are willing and able to at current prices. This condition is most important for short-run macroeconomic activity and short-run aggregate market analysis. In particular, overemployment is a key reason for the positive slope of the short-run aggregate supply curve. Overemployment is a primary reason the macroeconomy is able to produce MORE than full-employment production in the short run.
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WHITE GULLIBON
[What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors wanting to buy either a small, foam rubber football or an instructional DVD on learning to the play the oboe. Be on the lookout for high interest rates.
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The average length of a "business lunch" is about 36 minutes.
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"Everyone is bound to bear patiently the results of his own example. " -- Phaedrus, Philosopher
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IBS
International Bank for Settlements
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