Principles Of Economics (110) - Byu - Brennan Platt

Front 1

Equilibrium Interest Rate

Back 1

Fed policy (may) shift supply curve. Individuals and companies would sell bonds in an attempt to hold more money (think - what is the government doing -)

Front 2

Aggregate Demand may shift by...

Back 2

Decrease in $ supply - because it decreases interest, therefore decreases investment, therefore decreases GDP

Front 3

VELOCITY of Money

Back 3

is equal to: price level x real output (GDP)/Money Supply

Front 4

Price Level

Back 4

Is equal to nominal GDP/ Real GDP (it is our GDP deflator)

Front 5

Monopolies and taxes

Back 5

In a PC market, does not matter who pays the tax. Consumers will pay some - BUT if market is monopolistic, producers will not pay

Front 6

Long Run - Taxes

Back 6

Oh dear

Front 7

Short Run - Taxes

Back 7

Oh dear

Front 8

Monopolies

Back 8

okay

Front 9

Price Floor

Back 9

floor

Front 10

Price Ceiling

Back 10

hmm

Front 11

Short Run - AD/SRAS

Back 11

-

Hint 11

fun

Front 12

Long Run

Back 12

see slides

Hint 12

help

Front 13

Aggregate Demand

Back 13

C + I + NX + G

Hint 13

Same as GDP

Front 14

LRAS

Back 14

kk

Hint 14

Shifts

Front 15

SRAS

Back 15

nn

Hint 15

love others more - do not be unkind!

Front 16

Monopolistic Competition

Back 16

Same as Perfectly Competitive Market, but with heterogeneous goods

Front 17

Order of Prices in markets

Back 17

Perfectly Competitive --> Monopolistic Competition--> Oligopoly --> Monopoly

Front 18

Oligopoly

Back 18

Examples: Auto, Car Industries (In any particular market, only a few provide the services)

Front 19

Competition in Oligopoly

Back 19

Price War leads to lower price than Monopoly, but, still more than Perfectly competitive market.

Front 20

Collusion

Back 20

When several firms agree to jointly act (raise prices, lower output, etc.) - called a CARTEL when formally organized (ex: OPEC)

Front 21

Controlling Monopolies

Back 21

Anti-Trust Laws (Prevent mergers, collusions; REGULATE)
Public Ownership (Govt ownership--> USSR as an example of this)

Expiring Patents and Copyrights

Front 22

Monopolistic Competition (further details)

Back 22

Perfect Competition, Information, but heterogeneous goods; Moderate substitution due to brand loyalty- Consumer Preferences give companies some monopoly power (ex: General Mills Cereal, Reeses' etc.) FREE ENTRY AND EXIT in the Long Run, and in the Short Run, Barriers to entry apply

Front 23

Collusion Outcomes

Back 23

Group gets more profit, but individually they can get more profit by doing this - individual incentives still apply and thus frustrate this effort anyway

Front 24

Cartel continued

Back 24

Drug Cartel example: can coordinate choices to keep prices high; if one deviates, then the perpetrator is looked up and... gulp.Cartel = MOST EXTREME version of collusion

Front 25

Price Discrimination

Back 25

When a firm sells the same good to different customers at different prices (Requires firm to have market power, ability to distinguish between customers, ability to prevent resale, and may involve undercutting of another firm)

Front 26

Market FAILURES

Back 26

Externalities, Public Goods, Information Asymmetries, Monopolies or Market Power

Front 27

Externalities are... and have this effect...

Back 27

spillover effects to people who are not in the transaction/ side effects of one's person's choice on other people (can be positive or negative)

Front 28

Positive Externalities

Back 28

Landscaping your yard - increase the value of land; beekeeping and orchards - pollinate; success of your children.. BUT - no compensation for what you produce - compensation is a broad thing

Front 29

Negative Externalities

Back 29

Pollution, Annoying Behavior etc.

Front 30

Marginal Private Cost

Back 30

like supply curve; it is the Marginal cost to the actor making the choice

Front 31

Marginal External Cost

Back 31

Marginal Cost imposed on others

Front 32

Marginal Social Cost

Back 32

MPC + MEC = MSC ( adding up the costs for whole society)

Front 33

Marginal Private Benefit

Back 33

(MPB) - Benefit to the actor ( an individual demand curve)

Front 34

Marginal External Benefit

Back 34

Benefits that spill over to others

Front 35

Marginal Social Benefit

Back 35

(MSB) = MPB + MEB

Front 36

Free Markets and Externalities results in ...

Back 36

not enough Positive Externalities, too many negative ones

Front 37

Ways to solve the problem of externalities

Back 37

Command and Control - Government Forces the right choice