Chapter 1 Flashcards
Outputs
Final goods and services that firms and industries sell to consumers.
Inputs
Resources or factors of production required to produce final outputs.
Land, Labor, Capital, Raw materials, Entrepreneurship
Inputs are directly related to demand
What are the 4 major types of markets
POMM
- Perfect Competition- Large, Undifferentiated, Easy Entry, Complete information.
- Oligopoly-
- Monopolistic Competition- Barriers to Entry
- Monopoly-
4 Characteristics that distinguish the 4 markets
- Number of Firms
- Differentiated or undifferentiated products sold?
- Difficulty of Entry
- Amount of Info available to market participants
Price Taker (characteristic of perfect competition)
Firm that doesn’t have to lower its price to sell more output.
Cannot influence the price of its product
Perfect competition firms have no
Market Power - Ability to influence price
The Monopoly Model firms produce products
having no close substitutes
Monopolistic Model have _____ products and ____ _____
Differentiated, market power
Oligopoly Model
Small number of large firms dominate market. Sensitive to competition. (interdependent)
5 Major Catagories of spending
CIGXM
- Consumption (C)
- Investment (I)
- Government (G)
- Export (X)
- Import (M)
GDP = _ + _ + _ + _ - _
C + I + G + X - M
Fiscal Policies
Implemented by national government and involve changing Taxes and Government Expenditure
Monetary Policies focus on changing
the money supply to influence interest rates, which affect
Real Consumption
Investment Spending
Resulting levels of input and output
Microeconomic influences on managers
How consumer behavior affects revenue
How Production technology and input prices affect costs
How market and regulatory environment influence ability to set prices and respond to competitor strategies.
3 Factors affecting Macro Spending Behavior
P, M, F
- Private sector changes in behavior
- Monetary or fiscal changes of policy
- Foreign sector changes