November 25, 2015 

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PERFECT COMPETITION, TOTAL ANALYSIS: A perfectly competitive firm produces the profit-maximizing quantity of output that generates the greatest difference between total revenue and total cost. This total approach is one of three methods that used to determine the profit-maximizing quantity of output. The other two methods involve the direct analysis of economic profit or a comparison of marginal revenue and marginal cost.

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TWO-SECTOR KEYNESIAN MODEL: A model used to identify equilibrium in Keynesian economics based on aggregate expenditures by the two basic sectors (household and business). Equilibrium is achieved at the intersection of the aggregate expenditures line, AE = C + I, and the 45-degree line, Y = AE. This is the most basic Keynesian aggregate expenditures model that captures an induce expenditure (consumption) and an autonomous expenditure (investment).

     See also | Keynesian economics | Keynesian equilibrium | consumption line | aggregate expenditures line | 45-degree line | household sector | business sector | three-sector Keynesian model | four-sector Keynesian model |

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A disruption of consumer equilibrium identified with utility analysis caused by changes in the buyers' income, which results in a change in the quantities of the goods consumed. The change in buyers' income alters the income constraint and forces a reevaluation of the rule of consumer equilibrium.

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