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HORIZONTAL MERGER: The consolidation under a single ownership of two separately-owned businesses in the same industry. An example of a horizontal merger would be two soft drink companies merging to form a single firm. A horizontal merger should be contrasted with vertical merger--two firms in different stages of the production of one good, such that the output of one business is the input of the other; and conglomerate merger--two firms in totally, completely separate industries.
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Lesson 9: Consumer Demand | Unit 5: Taking Stock
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Page: 20 of 22
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- One point of interest on the horizon is the law of demand.
- Recall that...
- The law of demand states that an inverse relation exists between demand price and the quantity demanded, ceteris paribus.
- The portion of this definition that is most important to the theory of consumer demand is the demand price.
- Definitionally speaking,
- Demand price is the maximum price that buyers would be willing and able to pay for a given quantity of a good.
- The law of diminishing marginal utility is the guiding principle of consumer demand theory.
- It captures the relation between marginal utility and quantity.
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ASSUMPTIONS, KEYNESIAN ECONOMICS The macroeconomic study of Keynesian economics relies on three key assumptions--rigid prices, effective demand, and savings-investment determinants. First, rigid or inflexible prices prevent some markets from achieving equilibrium in the short run. Second, effective demand means that consumption expenditures are based on actual income, not full employment or equilibrium income. Lastly, important savings and investment determinants include income, expectations, and other influences beyond the interest rate. These three assumptions imply that the economy can achieve a short-run equilibrium at less than full-employment production.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time lost in your local discount super center hoping to buy either hand lotion, a big bottle of hand lotion or a lighted magnifying glass. Be on the lookout for door-to-door salesmen.
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This isn't me! What am I?
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Helping spur the U.S. industrial revolution, Thomas Edison patented nearly 1300 inventions, 300 of which came out of his Menlo Park "invention factory" during a four-year period.
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"The best way to cheer yourself up is to try to cheer somebody else up." -- Mark Twain
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VES
Variable Elasticity of Substitution
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