Perfect Competition in the Long Run

In the long run, we assume that all Factors of Production are variable, which means that the entrepreneur can adjust plant size or increase their output to achieve maximum profit. Perfect Competition Long Run equilibrium results in all firms receiving normal profits or zero economic profits.Perfect Competition Long Run Factor Mobility…
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Monopolistic Competition Market Structure

In Monopolistic Competition, there are many small firms who all have minimal shares of the market. Firms have many competitors, but each one sells a slightly different product. Firms are neither price takers (perfect competition) nor price makers (monopolies).Example of Monopolistic Competition The athletic shoe market:When you…
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Objectives of Central Banks

Central banks oversee the banking system in their country. They play an important role in managing a state's currency, money supply, and interest rates. There are five major objectives of central banks.Objectives of Central Banks1. Inflation A central bank pursues a low and stable rate of inflation. 2. Employment It aims for a…
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Market Structure: Oligopoly

In an Oligopoly market structure, there are a few interdependent firms dominate the market. They are likely to change their prices according to their competitors. For example, if Coca-Cola changes their price, Pepsi is also likely to.Examples of Oligopolies In the wireless cell phone service industry, the providers that tend to dominate…
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Cost-Push Inflation

A fall or left shift in Aggregate Supply is the cause of Cost-Push Inflation. This shift can occur from an increase in the cost of production or decrease in the volume of production. An increase in the Aggregate Demand curve causes Demand-Pull inflation. An interaction of cost-push inflation and demand-pull inflation results in the Wage Price…
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