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HOMOGENEOUS PRODUCT: Goods that are either physically identical or at least viewed as identical by buyers. In particular, the producer of a product can not be identified from the product itself. This is a key assumption underlying the perfect competition market structure, and like other assumptions is only approximated in the real world. Agricultural products, metals, and energy goods come as close as any in the real world.
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Lesson 2: Economic Science | Unit 2: Theory
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Page: 7 of 20
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Topic:
Economic Theories
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Three common economic theories:- Markets theory: It helps us understand how and why prices change, shortages and surpluses occur, and markets are monopolized.
- Aggregate Markets theory: It uses principles and concepts developed in the theory of markets, but adapts them to the study macroeconomic things like inflation, unemployment, national production, and business cycles.
- Keynesian theory: Named after it's creator John Maynard Keynes, it was developed to explain high rates of unemployment and other economic conditions that existed during the Great Depression of the 1930s.
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CONSTANT RETURNS TO SCALE A given proportional change in all resources in the long run results in the same proportional change in production. Constant returns to scale exists if a firm increases ALL resources--labor, capital, and other inputs--by 10 percent, and output also increases by 10 percent. This is one of three returns to scale. The other two are increasing returns to scale and decreasing returns to scale.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages trying to buy either a video game player or an AC adapter that won't fry your computer. Be on the lookout for broken fingernail clippers.
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Approximately three-fourths of the U.S. paper currency in circular contains traces of cocaine.
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"Defeat is simply a signal to press onward. " -- Helen Keller, author, lecturer
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