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ABSOLUTE ADVANTAGE: The general ability to produced more goods using fewer resources. This idea of absolute advantage is important for trading that occurs between both people and nations. A nation can get an absolute advantage from an advanced level of technology or higher quality resources. For a person, an absolute advantage can result from natural abilities or the acquisition of human capital (education, training, or experience).
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Lesson 20: Oligopoly | Unit 4: Analysis
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Page: 15 of 24
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Topic:
Kinked-Demand Curve
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- 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:
- A relatively more elastic segment for price increases.
- 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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LEGAL RESERVES The combination of vault cash and Federal Reserve deposits that banks can legally use to satisfy government reserve requirements. Legal reserves, which can also be considered total reserves, are divided between require reserves and excess reserves. Required reserves are used to back up deposits and process daily transactions, while excess reserves are then available for interest-paying loans.
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GREEN LOGIGUIN
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Today, you are likely to spend a great deal of time wandering around the downtown area hoping to buy either a wall poster commemorating the 2000 Olympics or a flower arrangement with a lot of roses for your grandmother. Be on the lookout for neighborhood pets, especially belligerent parrots.
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Before 1933, the U.S. dime was legal as payment only in transactions of $10 or less.
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"Defeat is simply a signal to press onward. " -- Helen Keller, author, lecturer
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CBOT
Chicago Board of Trade
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