monopoly + the macro labor market Flashcards
what can DWL be caused by?
monopoly, oligopoly, taxes, artificial scarcity, externalities, subsidies, price controls
monopoly
a firm that’s the only seller of a product without close substitutes
oligopoly
a market with a small number of sellers producing the same good
market power
an attribute of a firm that can sell its product at a range of feasible prices by acting as a price setter
when is monopoly markup the highest?
when demand is inelastic, life sustaining
when can monopoly markup be a good thing?
it motivates people cause if they invent something they expect very high profits.
participation rate
labour force / population of working age
unemployment rate
unemployed / labour force
employment rate
employed / population of working age
why does unemployment exist?
the cost of losing a job iz zero if there’s no unemployment
structural unemployment
its long term and persistent- a mismatch between skills demanded and skills possessed
what may cause structural unemployment?
technology- travel agents
China enters WTO
labour regulations can affect… (2)
- incentives to hire someone
2. incentives to look for work
cyclical unemployment
there was a possible match but there’s not enough demand- you’re unlucky that someone got there first.
aggregate demand
sum of the demand for all goods/services
