Key points
Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP.
The upward-sloping aggregate supply curve—also known as the short run aggregate supply curve—shows the positive relationship between price level and real GDP in the short run.
The aggregate supply curve slopes up because...
Key points
Gross national product, or GNP, includes what is produced domestically and what is produced by domestic labor and business abroad in a year.
National income includes all income earned: wages, profits, rent, and profit income.
Net national product, or NNP, is GNP minus depreciation.
Depreciation is the process by which capital ages...
Key points
Gross national product, or GNP, includes what is produced domestically and what is produced by domestic labor and business abroad in a year.
National income includes all income earned: wages, profits, rent, and profit income.
Net national product, or NNP, is GNP minus depreciation.
Depreciation is the process by which capital ages...
Key points
There is a four-step process that allows us to predict how an event will affect the equilibrium price and quantity using the supply and demand framework.
Step one: draw a market model (a supply curve and a demand curve) representing the situation before the economic event took place.
Step two: determine whether the economic event being analyzed affects demand...
Key points
Command-and-control regulation sets specific limits for pollution emissions and/or mandates that specific pollution-control technologies that must be used.
Although such regulations have helped to protect the environment, they have three shortcomings: they provide no incentive for going beyond the limits they set; they offer limited flexibility on where and...
In a competitive market, demand for and supply of a good or service determine the equilibrium price.
The law of demand
Markets have two agents: buyers and sellers. Demand represents the buyers in a market. Demand is a description of all quantities of a good or service that a buyer would be willing to purchase at all prices.
According to the law of demand, this relationship...
Key Points
Economic efficiency is the idea that it is impossible to improve the situation of one party without imposing a cost on another.
If a situation is economically inefficient, it becomes possible to benefit at least one party without imposing costs on others.
Consumer surplus is the gap between the price that consumers are willing to...
Key points
Long-run equilibrium in perfectly competitive markets meets two important conditions: allocative efficiency and productive efficiency.
These two conditions have important implications. First, resources are allocated to their best alternative use. Second, they provide the maximum satisfaction attainable by society.
Efficiency in perfectly...
Key points
In the market for goods and services, quantity supplied and quantity demanded are often relatively slow to react to changes in price in the short run, but they react more substantially in the long run.
As a result, demand and supply often—but not always—tend to be relatively inelastic in the short run and relatively elastic in the long run....
The essence of management is to manage everything: production, finances, personnel, resources to streamline the management system, from the initial situation to the improvement of results.
Management is management in a market economy, a set of principles and methods. means and forms of production management developed in the conditions of a market economy and applied in countries with a...
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