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TIE-IN SALE: A type of sale in which consumers can buy one good only if they purchase another good as well. For example, if your grocery store sells you a bag of tea with the condition that you buy a pound of sugar, that would be a tie-in sale. Because they allow a monopoly to increase its profit over what it could make by selling the two goods separately at constant prices, tie-in sales can be used to price discriminate. However, it is important to realize that there are other reasons for tie-in sales other than price discrimination, such as to increase efficiency. For example, when we buy a car, it comes as a package of several goods (tires, engine, etc), which would be very difficult (and inefficient) for consumers to assemble if they were bought separately.
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Lesson 17: Money | Unit 4: Money's History
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Page: 20 of 25
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Fiat money has little or no value in use compared to value in exchange. The value in exchange of fiat money is under control of an authority, usually government. The transition: - First: Paper currency was backed by metal stored in a secure location. The paper could be traded for equivalent amounts of silver or gold.
- Second: Because no one traded paper currency for metal, metal wasn't needed to back the paper. They just need a paper currency-to-metal exchange rate.
- Third: Authorities stopped fixing the currency-to-metal exchange price. Paper currency was valuable based on the ability to purchase goods.
A two-edged sword: - Authority acquires the ability to control money and also the responsibility.
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MARGINAL RETURNS The change in the quantity of total product resulting from a unit change in a variable input, holding all other inputs fixed. Marginal returns is an older and more generic term for marginal product. While marginal product has largely replaced marginal returns in most discussions of short-run production, the phrase does persist in a few terms like the law of diminishing marginal returns.
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A lump of pure gold the size of a matchbox can be flattened into a sheet the size of a tennis court!
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"You can't build a reputation on what you are going to do." -- Henry Ford, automaker
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OPEC
Organization of Petroleum Exporting Countries
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