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RESERVE RATIO: The amount of reserves required by the Federal Reserve System as a ratio of the amount deposits backed by the reserves. Modern reserve ratios are in the range of 1-3% for checkable deposits. The reserve ratio plays a key role in the deposit multiplier. The simple deposit multiplier is simply the inverse of the reserve ratio. If the reserve ratio is 5%, then the deposit multiplier is 20. It's just that simple.

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Lesson 16: Perfect Competition | Unit 3: Doing Graphs Page: 16 of 28

Topic: Short-Run Alternatives <=PAGE BACK | PAGE NEXT=>

  • The three alternatives for short-run production facing a perfectly competitive firm are:

    • P > ATC: Total revenue exceeds total cost and the firm receives a positive economic profit. In this case, a firm maximizes profit by producing the quantity of output that equates marginal revenue and marginal cost.

    • ATC < P > AVC: Total revenue falls short of total cost, meaning the firm incurs an economic loss (or negative economic profit). In spite of the loss, because the price exceeds average variable cost, the firm can maximize profit (minimize loss) by producing the quantity of output that equates marginal revenue and marginal cost.

    • P < AVC: Total revenue also falls short of total cost, and the firm incurs an economic loss (or negative economic profit). In this case the firm maximizes profit (that is, minimizes loss) by reducing the quantity of output to zero.


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AUTONOMOUS EXPORTS

Exports to the foreign sector that do not depend on domestic income or production (especially national income or gross domestic product). Exports depend on foreign income or production, but not on domestic income or production. While other expenditures have both autonomous and induced components, exports are exclusively autonomous. Autonomous exports are a key part of the autonomous part of net exports. Induced net exports are due to induced imports.

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Today, you are likely to spend a great deal of time at a garage sale hoping to buy either a T-shirt commemorating next Thursday or a birthday gift for your uncle. Be on the lookout for slightly overweight pizza delivery guys.
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Woodrow Wilson's portrait adorned the $100,000 bill that was removed from circulation in 1929. Woodrow Wilson was removed from circulation in 1924.
"And while the law of competition may be sometimes hard for the individual, it is best for the race, because it ensures the survival of the fittest in every department. "

-- Andrew Carnegie, entrepreneur

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