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Economics Unit 3 Study Guide Answers

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Competitive Situations
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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
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Pure Competition
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The market structure that exists when there are many small businesses selling one standardized product.
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Monopolistic Competition
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a market structure in which many companies sell products that are similar but not identical
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Oligopoly Competition
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the market structure that exists when there are very few businesses selling a product
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Monopoly
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(economics) a market in which there are many buyers but only one seller
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Government Sponsored Monopolies
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Geographic Monopolies
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a market whose geographic area is so limited that a single seller can control an item’s manufacture, sale, distribution, or price.
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Professional Sports Monopolies
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Inflation
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a general and progressive increase in prices
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Recession
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the state of the economy declines
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Depression
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a long-term economic state characterized by unemployment and low prices and low levels of trade and investment
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New York Stock Exchange
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location in new York City on Wall Street where stocks are bought and sold
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American Stock Exchange
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The second largest exchange with less stringent requirements allowing for younger, smaller companies to be listed.
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NASDAQ
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a computerized data system to provide brokers with price quotations for securities traded over the counter
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Dow Jones Industrial Average
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a measure of stock market prices based on thirty leading companies of the new york stock exchange and nasdaq
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Standard and Poor’s 500
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an index based on the stock prices of 500 of the largest firms by market value
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Bear Market
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A steady drop in the stock market over a period of time
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Bull Market
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a period of increased stock trading and rising stock prices
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Discouraged Workers
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individuals who would like to work but have given up looking for a job
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Dishonest Non-Workers
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people who say they’re looking for a job but really arn’t
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Frictional Unemployment
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A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.
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Structural Unemployment
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unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one
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Seasonal Unemployment
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unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season
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Cyclical Unemployment
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unemployment directly related to swings in the business cycle
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Induced Unemployment
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unemployment that’s a result of government policies
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Economic Cycle
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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
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Main cause of inflation
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Government produces too much money
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Purpose of stock market
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To make money on how well a company does
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Benefits and risks of investing in stock market
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Criteria for unemployment
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16 years or older, actively searching for job within last 4 weeks.
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Unemployment rate
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the percentage of the work force that is unemployed at any given date