Monopolies negative consequences- Chapter 7

● Too much power to one country

● Underproduce to maximize profit

US Business cycle patterns- Chapter 10

● Alternating periods of economic growth
● Measures of macro performance in the business cycle; Output growth,Unemployment,
inflation.
● Recessions can occur where realGDP declines
● Unemployment and its types: Seasonal, Frictional, Structural.

Macroeconomic theory purpose

● The purpose of Macroeconomics is to identify the big problems of the economy as a
whole.

Be able to identify profit-maximize rate

● Where marginal revenue equals marginal cost.
● When monody produces lower quantity, then MR>MC at those levels of output and the
firm can make higher profits by expanding output.

Marginal revenue
● External revenue from selling one more unit

Perfect competition production

● Competes with other firms

Social demand
● All costs and benefits of consumption of a good on society
GDP definition
● Gross domestic product; the total value of final goods what we produce in a period of
time within this boundary of a nation.

Perfect competition characteristics

● No company holds a substantial market share.
 ● The industry output is standard
● Freedom of entry and exit

‘Free rider dilemma

● Public goods where consumers have access to goods and services that are non-
exclusive and can receive benefits.

Sherman Act purpose

● The purpose of the Sherman act was to prohibit conspiracy in restraint of trade

Unemployed definition
● Number of individuals who are without a job within the labor force and are actively
looking for one.

Opportunity cost of working

● Taking away leisure time to for productivity within the jib tasks

Structural unemployment
● Unemployed individuals are unable to work due to the job not having adequate skills and
or requirements

Public good
● Any good or services that is open to the public and no exclusive to purchase
Private good
● Specific Good or service of purchase that is exclusive to a particular group and benefits
are limited to only a select few.

Market failure definition

● When the economy is not at equilibrium

Monopolist and the relation to price

● Price remains high
 ● Economic profit is constant
Monopoly characteristics
● Price maximized
● Price maker
● Hugh barriers to entry, single seller

Three main macroeconomic performance

● Yield curve
● Interest rates
● Shared prices
Natural monopoly definition and the economics of scale relationship
● When one firm can chive economies of scale over the entire range of market supply
Labor supply
● The willingness and ability to work specifically on the amount of time at alternative
wages in a given time period.
Monopolistic competition
● Many forms supply essentially the same product but each firm significant brand loyalty
Be able to identify economic profits on a graph

Unemployment formula
● Unemployment rate = number of unemployed / number in labor
Perfectly competition production output (hint where MC=P)
●
Marginal utility and the decision to work
● How much more of a good or service and the satisfaction obtained
Marginal Costs
● Change in total cost/ change in total output
Marginal Revenue
● External revenue from selling one more unit
Externalities
● Costs/ benefits borne by third party
Inflation
 ● Increase in average level of prices of goods and services
● Causes and effects of it may include welfare and seller higher goods
Market structures
● Helps tell the difference between firms based off their types of goods and services.
Optimal mix of output
● Most desirable combination of outputs attainable with existing resources, technology,
and social values
Profit maximizing monopoly output and price
● The level of output where MC equals MR
Consequences of decrease of production
● Recessions
● Higher unemployment
● Lower wages and incomes
● Lost opportunity costs
Real GDP
● What we produce in a period of time within boundaries of a nation
Profit maximization condition

● Amount of factor inputs to produce a certain output