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THIRD RULE OF INEQUALITY: The third of seven basic rules of the economy. It is a fact of life that resources, income, and wealth are not equally distributed. Some people have more and some people have less. Why is this so? We can look to the age-old distinction between nature and nurture for insight. On the nature side, some people are born with more talents, abilities and intelligence than others, which they use to gain ownership and control of income-generating and wealth-producing resources. On the nurture side, some people work harder to develop skills, acquire education, and uncover opportunities that lead to ownership and control of income-generating and wealth-producing resources (human capital).
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Lesson 17: Market Structures | Unit 2: Four Types
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Page: 8 of 23
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- The monopoly definition:
- Monopoly is a market structure characterized by a single firm producing a unique good with no close substitutes, and strict limits on entry and exit.
- The central feature of monopoly is that one firm IS the market, a single firm sells ALL output:
- No Close Substitutes: Monopoly achieves single-firm status because it produces or supplies a good with NO close substitutes.
- Entry Barriers: Monopoly also achieves and maintains single-firm status because other potential competitors are prevented from entering the market.
- Whereas perfect competition is the benchmark for "efficiency," monopoly is the benchmark for "inefficiency."
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KEYNESIAN CROSS A diagram illustrating the basic Keynesian theory of macroeconomics, with aggregate expenditures measured on the vertical axis and aggregate production measured on the horizontal axis, with the relation between aggregate expenditures and aggregate production represented by a positively-sloped aggregate expenditures line. The "cross" aspect of this diagram is the intersection between the aggregate expenditures line and a 45-degree line indicating every point of equality between aggregate expenditures and aggregate production. The "Keynesian" aspect of this diagram is derived from John Maynard Keynes, the developer and namesake of Keynesian economics.
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The word "fiscal" is derived from a Latin word meaning "moneybag."
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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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LRMC
Long Run Marginal Cost
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