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MARGINAL FACTOR COST CURVE, PERFECT COMPETITION: A curve that graphically represents the relation between marginal factor cost incurred by a perfectly competitive firm for hiring an input and the quantity of input employed. A profit-maximizing perfectly competitive firm hires the quantity of input found at the intersection of the marginal factor cost curve and marginal revenue product curve. The marginal factor cost curve for a perfectly competitive firm with no market control is horizontal.
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Lesson 19: Money Creation | Unit 3: Modern Banking
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Page: 13 of 23
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Topic:
Yet Another Bank
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- A purchase is made with a check written on Bob's State Bank, which is deposited in Charley's Credit Union.
- Charley's Credit Union adds $81 worth of liabilities to the store's account.
- This liability is balanced with reserves transferred from Bob's Bank.
- Bob's Bank losses $81 and Charley's Credit Union gains $81 of reserves.
- Bob's Bank ends up with $9 of reserves and an $81 loan.
- Charley's Credit Union has $81 in reserves. It keeps 10% ($8.10), giving it $71.90 of excess reserves.
- Charley's Credit Union makes a $71.90 loan to a customer.
- This creates $71.90 of money. The three banks have created $242.90 worth of money.
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AVERAGE FACTOR COST CURVE, PERFECT COMPETITION A curve that graphically represents the relation between average factor cost incurred by a perfectly competitive firm for employing an input and the quantity of input used. Because average factor cost is essentially the price of the input, the average factor cost curve is also the supply curve for the input. The average factor cost curve for a perfectly competitive firm with no market control is horizontal. The average revenue curve for a firm with market control is positively sloped.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages wanting to buy either a replacement washer for your kitchen faucet or a stretchable, flexible watch band. Be on the lookout for slightly overweight pizza delivery guys.
Your Complete Scope
This isn't me! What am I?
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A thousand years before metal coins were developed, clay tablet "checks" were used as money by the Babylonians.
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"The past is a foreign country; they do things differently there." -- Leslie Poles Hartley, Writer
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WFTU
World Federation of Trade Unions
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