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Micro and macroeconomics

Micro and macroeconomics - theory and become the last...

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Micro and macroeconomics - Adam Smith had 3 theories about economics o Invisible hand theory – Where peoples greed helps the economy because we all grow together. o Dollar Vote Theory –We as consumers would be rational to pick the highest/lowest price. - Mixed Economy o Market Concept – the obligation of business is to build needs and wants Needs cannot be created, but wants can be created. o Monopoly – Think about the amount of control that the company has. o Oligopoly Alexander banes – Argues that if an industry has 7 or fewer firms contributing 75% or more, then that industry is an oligopoly. Difference between oligopoly and a cartel – These companies will act as one and set prices together. This practice of cartel is illegal. o Competition Pure Competitive – The effort is supposed to fufill the invisible hand
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Unformatted text preview: theory, and become the last company standing. o GNP – Gross National Product Sum total of all goods and services that are produced and consumed in any given country, across their international borders in a specific fiscal period. When someone says talks about GNP value, its like the final answer. Decisions must be made way before GNP value is known. GNP = Ec + I + G + S + NFI • E = Sigma • C = Consumption • I = Capital Investment • G = Government • S = Savings • NFI =Net Foreign Investment Characteristics that should be looked at(look for relationship between) • Consumption • Savings • If consumers are saving, then they can’t spend. •...
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