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NONDURABLE GOODS, CONSUMPTION: Personal consumption expenditures on tangible goods that tend to last for less than a year. Common examples are food, clothing, and gasoline. This is one of three categories of personal consumption expenditures in the National Income and Product Accounts maintained by the Bureau of Economic Analysis. The other two are durable goods and services. Nondurable goods are about 30% of personal consumption expenditures and 20% of gross domestic product.

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Lesson 20: Oligopoly | Unit 4: Analysis Page: 15 of 24

Topic: Kinked-Demand Curve <=PAGE BACK | PAGE NEXT=>

  • How and why oligopoly firms have rigid prices can be illustrated with the use of the kinked-demand curve.

  • A kinked-demand curve is a demand curve with two distinct segments with different elasticities that join to form a kink.
  • The two segments of a kinked-demand curve are:

    1. A relatively more elastic segment for price increases.
    2. A relatively less elastic segment for price decreases.

  • The most striking feature of this curve is that it comes it three parts:

    • One part corresponds with the relatively more elastic demand curve for price increases.

    • The second part corresponds with the relatively less elastic demand curve for price decreases.

    • The third part is the vertical line connecting these two segments.

  • This disjointed marginal revenue curve is the key to oligopoly price rigidity.

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AUTONOMOUS EXPENDITURES

Expenditures on aggregate production by the four macroeconomic sectors that do not depend on income or production (especially national income or even gross domestic product). That is, changes in income do not generate changes in these expenditures. Each of the four aggregate expenditures--consumption, investment expenditures, government purchases, and net exports--have an autonomous component. Autonomous expenditures are affected by the ceteris paribus aggregate expenditures determinants and are measured by the intercept term of the aggregate expenditures line. The alternative to autonomous expenditures are induced expenditures, expenditures which do depend on income.

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