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ECONOMIC RECOVERY TAX ACT: Unofficially called the Kemp-Roth, this was a cornerstone of economic policy under President Reagan passed in 1981. The three components of this act were: (1) a decrease in individual income taxes, phased in over three years, (2) a decrease in business taxes, primarily through changes in capital depreciation, and (3) the indexing of taxes to inflation, which was implemented in 1985. This act was intended to address the stagflation problems of high unemployment and high inflation that existed during that 1970s and to provide greater incentives for investment. A primary theoretical justification is found in the Laffer curve relation between tax rates and total tax collections.
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                           PERFECT COMPETITION, REALISM: Perfect competition is an idealized market structure that does NOT exist in the real world. While some real world industries might come relatively close to one or two of the four key characteristics of perfect competition, none matches all four sufficiently that they can be declared PERFECTLY competitively. Some industries come close on the large number of small firms and the identical product characteristics. A few industries have relatively good, although not perfect, information about prices and technology. However, almost all industries fall far short of the perfect mobility characteristics. Perfect competition is NOT intended as a description of real world industries. It is designed as a idealized benchmark that can be used to evaluate real world industries. The extremely restrictive characteristics that make up perfect competition (perfect "this" and perfect "that") create a market structure that efficiently allocated resources. If the real world economy was actually populated by nothing but perfect competition, then resources would be efficiently allocated. It would not be possible to reallocate resources in any way that would generate any greater satisfaction of wants and needs.Real world market structures (especially oligopoly and monopolistic competition), all of which fall short of the idealized characteristics of perfect competition, can then be compared against the perfectly competitive benchmark. The fun part of economic analysis is then to see how and where particular industries fall short and the degree to which each of these specific characteristics contribute to the lack of efficiency. Consider Phil the zucchini grower. As one of gadzillions of zucchini growers, each producing identical zucchinis, Phil would seem to be operating in a perfectly competitive industry. But is he... really? - First, consider the large number of growers characteristic. While there are gadzillions of zucchini growers, Phil does not compete with every zucchini grower in the nation. Because zucchinis are perishable and costly to transport, Phil's market is likely confined to his hometown of Shady Valley. In this case, he might be one of only a few hundred zucchini producers. Being one of a few hundred provides significantly more market control that being one of gadzillions.
- Second, consider the identical product characteristic. If Phil provides "service with a smile" and offers only the plumpest, juiciest, ripest zucchinis for sale, then buyers might prefer to buy Phil's zucchinis over those of other zucchini growers. In the view of the buyers, Phil's zucchinis are not identical to the other zucchinis in the Shady Valley zucchini market.
- Third, consider the perfect resource mobility characteristic. While Phil can easily exit the Shady Valley zucchini market by not planting any more zucchinis, there are barriers to entering the market. In particular, a zucchini grower needs a chunk of land upon which to grow zucchinis. While most homeowners in Shady Valley could easily clear a plot by the back fence, landless apartment dwellers or the homeless lack this opportunity. The cost of entering the zucchini market might be low, but it is not zero.
- Fourth, consider the perfect knowledge characteristic. A lot of folks are completely clueless when it comes to growing zucchinis. Are the seeds planted by a full moon in March? How far apart are the seeds planted? Do zucchinis grow on trees? Is it necessary to irrigate? How much and what kind of fertilizer is added? Are zucchinis harvested (or picked) when they are green, or yellow, or some other color? Moreover, what is the going price of zucchinis? Is it really $2.50? So many questions, so few answers. And certainly not perfect knowledge.
 Recommended Citation:PERFECT COMPETITION, REALISM, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: May 29, 2023]. Check Out These Related Terms... | | | | | Or For A Little Background... | | | | | | | | | And For Further Study... | | | | | | | | | | Related Websites (Will Open in New Window)... | | | |
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RED AGGRESSERINE [What's This?]
Today, you are likely to spend a great deal of time watching the shopping channel seeking to buy either a genuine down-filled pillow or one of those "hang in there" kitty cat posters. Be on the lookout for the happiest person in the room. Your Complete Scope
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The first paper notes printed in the United States were in denominations of 1 cent, 5 cents, 25 cents, and 50 cents.
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"The man who does not read good books has no advantage over the man who cannot read them. " -- Mark Twain
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SIC Standard Industrial Classification
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