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MARKET TRANSACTION: The exchange of goods and services through a market. The set of market transactions taking place in the economy is most important in terms of measuring gross domestic product (GDP). Market transactions provide the basic data used by number crunchers at the Bureau of Economic Analysis to begin the estimation of GDP. However, these number crunchers don't just want to measure market transactions, their goal is to measure economic production. As such, they eliminate some market transactions that do not involve economic production, then add economic production that do not involve market transactions.
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Lesson 16: Perfect Competition | Unit 5: Evaluation
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Page: 25 of 28
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- Economists are very fond of perfect competition. The reason is efficiency
- Here's how perfect competition achieves efficiency.
- First, perfectly competitive firms maximize profit by producing the quantity of output that equates marginal revenue and marginal cost.
- Second, perfectly competitive firms produce at the minimum point of the short-run and long-run average cost.
- Third, perfectly competitive firms earn only a normal profit, equating price and average cost.
- Perfect competition is the ONLY market structure that achieves efficiency.
- This is why economists use perfect competition as THE benchmark for efficiency.
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PRIVATE PROPERTY An economic institution in which goods, resources, commodities, or other assets (property) are owned and controlled by households and businesses (the private sector) rather than government (the public sector). Private property is a key institution, along with individual freedom and competitive markets, that helps to form the structure of capitalism.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors wanting to buy either pink cotton balls or a genuine down-filled comforter. Be on the lookout for the last item on a shelf.
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This isn't me! What am I?
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In the early 1900s around 300 automobile companies operated in the United States.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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WACM
Weak Axiom of Cost Minimization
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