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LAW: Generally accepted, verified, fundamental principle of nature. Laws have been tested and verified through the scientific method. As a house is constructed from concrete, lumber, and nails, a theory is constructed from laws. To be a fundamental law of nature, a principle must capture a cause-and-effect relationship about the workings of the world.
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Lesson 19: Monopolistic Competition | Unit 3: Output
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Page: 13 of 22
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Topic:
Long-Run Equilibrium
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- The long run, which is the period in which all inputs are variable, has two implications for monopolistic competition firms.
- A firm adjusts plant size to maximize profit in the long run.
- Firms enter and leave the industry to achieve zero economic profit.
- The end result of this long-run adjustment is:
- The demand curve for each firm is tangent to the long-run average cost curve and the short-run average total cost curve. This ensures zero economic profit.
- However, because the demand curve is negatively sloped, this point of tangency takes place on the negatively-sloped portion of the long-run average cost curve.
- The negatively-sloped portion of the long-run average cost curve portion results from economies of scale and is less than the minimum efficient scale.
- The primary implication is that monopolistic competition does not use capital as efficiently as perfect competition.
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FINANCIAL MARKETS Markets that exchange financial instruments, or the legal claims to the ownership of physical assets. All four sectors--household, business, government, and foreign operate on both the demand and supply sides of financial markets. The household sector is generally a net buyer of legal claims as it saves a portion of income. The business and government sector tend to be net sellers as they borrow the funds used to pay for expenditures. The study of macroeconomics is concerned with how the flow of income through financial markets affects short-run business-cycle instability and long-run economic growth. The financial markets are one of three primary sets of macroeconomic markets. The other two are product markets and resource markets.
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ORANGE REBELOON
[What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store trying to buy either a case of blank recordable DVDs or a pair of red goulashes with shiny buckles. Be on the lookout for slightly overweight pizza delivery guys.
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
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"The greatest things ever done on Earth have been done little by little. " -- William Jennings Bryan
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