Tutorial SecA

    Cards (26)

    • Monopoly
      Firm that sets the price (price maker)
    • Monopoly
      • They will prevent other firms from entering the market
    • Monopoly
      • Firm where: ATC = $10, P = $11, MC = $8, MR = $7
    • Disposable income
      Income after taxes have been paid and transfers received
    • The allocative inefficiency of nondiscriminating monopoly arises from the fact that price exceeds marginal cost
    • Aggregate expenditure
      Spending by households, government, firms, and foreigners on final goods and services
    • Pure monopoly
      The monopolist produces a product with no close substitutes
    • Marginal propensity to consume
      The change in consumption divided by the change in income
    • Barrier to entry under pure monopoly

      • Ownership of essential resources
    • Marginal propensity to save
      1 minus the marginal propensity to consume
    • Simultaneous consumption
      Marginal costs may fall lower due to a product's ability to satisfy a large number of
      consumers at the same time
    • Long-run aggregate-supply (LRAS) curve

      • Inconsistent with the concept of monetary neutrality
      • Consistent with the idea that point A represents a long-run equilibrium but not a short-run equilibrium when the relevant short-run aggregate-supply curve is AS1
      • Indicates that Y1 is the natural rate of output
    • Consumption function
      C = C0 + MPC(Yd)
    • Shift of the short-run aggregate-supply curve from AS1 to AS2
      • Could be caused by an outbreak of war in the Middle East
      • Could be caused by a decrease in the expected price level
      • Causes the economy to experience an increase in the unemployment rate
      • Causes the economy to experience stagflation
    • Natural monopoly
      An industry in which one firm can supply the entire market at a lower price than can two
      or more firms
    • Things that would shift the long-run aggregate supply curve to the right
      • Increased immigration
      • Decrease in the minimum wage
      • Less generous unemployment insurance
      • Increase in the capital stock
      • Increase in the average level of education
      • Discovery of new mineral deposits
      • Advances in technology
      • Removal of barriers to international trade
    • Actual investment
      Includes unplanned inventory changes
    • Legal monopoly
      A monopoly that is protected by law from
      competition. A statutory monopoly may take the form of a government monopoly where the state
      owns the particular means of production or government-granted monopoly where a private
      interest is protected from competition such as being granted exclusive rights to offer a particular
      service in a specific region (eg: patented inventions) while agreeing to have their policies and
      prices regulated
    • Aggregate demand and supply schedules
      Purpleland's potential GDP is $675 billion
    • Planned investment
      Does not include unplanned inventory changes
    • Types of monopoly
      • Legal monopoly
      • Natural monopoly
      • Single-price monopoly
      • Price-discriminating monopoly
    • Plotting the aggregate demand curve, the short-run aggregate supply curve, and the long-run aggregate supply curve
      AD curve is AD0
    • Consumption spending (C) is spending by households on final goods and services.
    • Legal monopoly
      A monopoly that is protected by law from competition. Can take the form of a government monopoly or a government-granted monopoly where a private interest is protected from competition
    • Investment spending (I) is planned spending by businesses on plant and equipment, as well as new home construction.
    • Short-run equilibrium real GDP and price level in Purpleland
      SR equilibrium real GDP is $600 billion, and the price level is 100
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