Economics Unit 3 Study Guide

Competitive Situations
wage and quantity supplied determined by supply and demand. No one has market power. Firm has horizontal supply curve =Rwhich is the same as MRC. Wage=MRP
Pure Competition
The market structure that exists when there are many small businesses selling one standardized product.
Monopolistic Competition
a market structure in which many companies sell products that are similar but not identical
Oligopoly Competition
the market structure that exists when there are very few businesses selling a product
Monopoly
(economics) a market in which there are many buyers but only one seller
Government Sponsored Monopolies
Geographic Monopolies
a market whose geographic area is so limited that a single seller can control an item’s manufacture, sale, distribution, or price.
Professional Sports Monopolies
Inflation
a general and progressive increase in prices
Recession
the state of the economy declines
Depression
a long-term economic state characterized by unemployment and low prices and low levels of trade and investment
New York Stock Exchange
location in new York City on Wall Street where stocks are bought and sold
American Stock Exchange
The second largest exchange with less stringent requirements allowing for younger, smaller companies to be listed.
NASDAQ
a computerized data system to provide brokers with price quotations for securities traded over the counter
Dow Jones Industrial Average
a measure of stock market prices based on thirty leading companies of the new york stock exchange and nasdaq
Standard and Poor’s 500
an index based on the stock prices of 500 of the largest firms by market value
Bear Market
A steady drop in the stock market over a period of time
Bull Market
a period of increased stock trading and rising stock prices
Discouraged Workers
individuals who would like to work but have given up looking for a job
Dishonest Non-Workers
people who say they’re looking for a job but really arn’t
Frictional Unemployment
A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.
Structural Unemployment
unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one
Seasonal Unemployment
unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season
Cyclical Unemployment
unemployment directly related to swings in the business cycle
Induced Unemployment
unemployment that’s a result of government policies
Economic Cycle
Phase I (spring): Expansion- Production expanding, more goods produced, more jobs available, more spending, people optimistic and confident about future. Phase II (summer): Prosperity- Boom! business working at capacity, more money around, salaries increase, high demand for goods, people feel some concern about potential slowdown. Phase III (fall): Recession- people pessimistic, insecure, Inflation, profits go down, business’s lay off, unemployment, less earnings- cant pay bills or mortgage, less production, reduced spending. Phase IV (winter): Recovery- Government lowers taxes and interest rates, people have more money to spend and gradually start to buy, more jobs are created, people are cautiously hopeful. Depression- Business close, very high unemployment, banks fail, people lose savings
Main cause of inflation
Government produces too much money
Purpose of stock market
To make money on how well a company does
Benefits and risks of investing in stock market
Criteria for unemployment
16 years or older, actively searching for job within last 4 weeks.
Unemployment rate
the percentage of the work force that is unemployed at any given date

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