Real Vs.

Nominal
In economics, nominal value is measured in
terms of money, whereas real value is measured
against goods or services. ... In contrast with
a real value, a nominal value has not been
adjusted for inflation, and so changes
in nominal value reflect at least in part the
effect of inflation
 Real Vs. Nominal
• Nominal GDP is the market value of goods
and services produced in an economy,
unadjusted for inflation.
• Real GDP is nominal GDP, adjusted for
inflation to reflect changes in real output
 Purchasing Power
• the financial ability to buy products and services.
• the value of a sum of money.
• Purchasing power is the amount of goods and
services that can be purchased with a unit
of currency. For example, if one had taken one
unit of currency to a store in the 1950s, it would
have been possible to buy a greater number of
items than would be the case today.
 Per Capita Income
Per capita income or average income measures
the average income earned per person in a given
area in a specified year. It is calculated by
dividing the area's total income by its total
population. Per capita income is national income
divided by population size.
 Perfect Competition
the situation prevailing in a market in which buyers
and sellers are so numerous and well informed that all
elements of monopoly are absent and the market
price of a commodity is beyond the control of
individual buyers and sellers.
 Perfect Competition
• Pure or perfect competition is a theoretical
market structure in which the
following criteria are met:
 Perfect Competition
• All firms seall an identical product (the product is a
"commodity" or "homogeneous").
• All firms are price takers (they cannot influence the
market price of their product).
• Market share has no influence on prices.
• Buyers have complete or "perfect" information—in the
past, present and future—about the product being sold
and the prices charged by each firm.
• Resources for such a labor are perfectly mobile.
• Firms can enter or exit the market without cost.
 Monopoly

A market structure characterized by a

single seller.
There is only one seller of a particular
commodity.
 Monopoly
selling a unique product in the market. In
a monopoly market, the seller faces no
competition, as he is the sole seller of goods
with no close substitute.
 Monopoly
• A monopoly refers to when a company and its
product offerings dominate a sector or industry.
Monopolies can be considered an extreme result
of free-market capitalism in that absent any
restriction or restraints, a single company or
group becomes large enough to own all or nearly
all of the market for a particular type of product
or service. The term monopoly is often used to
describe an entity that has total or near-total
control of a market.
 Duopoly

a situation in which two suppliers

dominate the market for a commodity
or service.
 Duopoly
• A duopoly is a type of oligopoly where two
firms have dominant or exclusive control over
a market. It is the most commonly studied
form of oligopoly due to its simplicity.
Duopolies sell to consumers in a competitive
market where the choice of an individual
consumer can not affect the firm
 Duopoly
• A duopoly is a situation where two companies
together own all, or nearly all, of the market
for a given product or service. A duopoly is the
most basic form of oligopoly, a market
dominated by a small number of companies. A
duopoly can have the same impact on the
market as a monopoly if the two players
collude on prices or output. Collusion results
in consumers paying higher prices than they
would in a truly competitive market,
 Oligopoly

a state of limited competition, in

which a market is shared by a small
number of producers or sellers.
 Oligopoly
• Oligopoly is a market structure with a small
number of firms, none of which can keep the
others from having significant influence. The
concentration ratio measures the market
share of the largest firms. A monopoly is one
firm, duopoly is two firms and oligopoly is two
or more firms. There is no precise upper limit
to the number of firms in an oligopoly, but the
number must be low enough that the actions
of one firm significantly influence the others.
 Oligopoly
• With few sellers, each oligopolist is likely to be
aware of the actions of the others. According
to game theory, the decisions of one firm
therefore influence and are influenced by
decisions of other firms. Strategic planning by
oligopolists needs to take into account the likely
responses of the other market participants. Entry
barriers include high investment requirements,
strong consumer loyalty for existing brands
and economies of scale.