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OLIGOPOLISTIC BEHAVIOR: Oligopolistic industries are nothing if not diverse. Some sell identical products, others differentiated products. Some have three or four firms of nearly equal size, others have one large dominate firm (a clear industry leader) and a handful of smaller firms (that follow the leader). Whatever products they may sell, and however they may be organized, oligopolistic industries share several behavioral tendencies, including (1) interdependence, (2) rigid prices, (3) nonprice competition, (4) mergers, and (5) collusion. In other words, each oligopolistic firm keeps a close eye on the decisions made by other firms in the industry (interdependence), are reluctant to change prices (rigid prices), but instead try to attract the competitors customers using incentives other than prices (nonprice competition), and when they get tired of competing with their competitors they are inclined to cooperate either legally (mergers) or illegally (collusion).
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Lesson 8: Market Shocks | Unit 3: Single Shifts
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Page: 9 of 20
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The six steps for a decrease in demand:- A determinant changes. The price of pecan pie, a substitute for hot fudge sundaes, declines.
- A curve to shifts. The demand curve for hot fudge sundaes shifts leftward.
- A shortage or a surplus occurs. The decrease in demand causes a surplus of hot fudge sundaes.
- The price changes. The price of hot fudge sundaes goes down.
- The quantities demanded and supplied change. The quantity supplied for hot fudge sundaes decreases while their quantity demand is increased.
- The market imbalance is eliminated and equilibrium is restored. The surplus of hot fudge sundaes is eliminated. The price is lower and the quantity exchanged is less.
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PERSONAL TAX AND NONTAX PAYMENTS The official item in the National Income and Product Accounts maintained by the Bureau of Economics Analysis measuring the personal income taxes paid to the government sector on personal income received by the household sector. Personal tax and nontax payments are subtracted from personal income (PI) to calculate disposable income (DI). Personal tax and nontax payments are about 15 percent of personal income and about 13 percent of gross domestic product.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius looking to buy either a genuine down-filled comforter or a 200-foot blue garden hose. Be on the lookout for high interest rates.
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This isn't me! What am I?
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The average bank teller loses about $250 every year.
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"I can't change the direction of the wind, but I can adjust my sails to always reach my destination." -- Jimmy Dean
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JF
Journal of Finance
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