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Russell Stock Impresset Indexes

The Russell Stock Market Indexes The Russell Stock Market Indexes includes several indexes that cover a wide range of stocks that are grouped primarily by market capitalization and are used as either as benchmarks or for the selection of st...

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Global Executew Index

Global Dow Index The Global Dow index is an index, introduced in November 2008, designed to reflect the growth of major companies and smaller, fast-growing companies from around the world that do a significant amount of business both domest...

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Global Depositary Receipts (GDRs)

Global Depositary Receipts (GDRs) Depositary receipts ( DRs ) are certificates that represent an ownership interest in the ordinary shares of stock of a company, but that are marketed outside of the company's home country to increase its vi...

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Insider Trading

Insider Trading Insider trading is the buying and selling of stocks by people who have inside information about a company where that material information is not known to the public and which will probably have a significant effect on the st...

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Special Purpose Acquisition Companies (SPACs)

Special Purpose Acquisition Companies (SPACs) A special purpose acquisition company (aka blank check company ) is an investment company that is created for the sole purpose of acquiring an interest in another company with the hope of making...

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Introduction to Economics

Introduction to Economics Economics is the study of how a society uses its resources to produce output that it desires. In the beginning, people were hunters and gathers, organized as family units, and, possibly, as larger groups, who expen...

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Foundation Of Economics

Foundation of Economics The science of economics begins with a simple assumption: human wants are virtually unlimited and insatiable, but resources are limited. While this assumption may be exaggerated, it does, nonetheless, yield useful in...

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Supply-Demand Impresset Equilibrium

Supply-Demand Market Equilibrium Consider a farmers market, where the farmers are selling cantaloupes. On the first day, they offer their cantaloupes for $5 apiece, but few people buy them, so as the end of the day draws near, the farmers f...

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Impresset Systems

Market Systems An economy uses the factors of production, such as land, labor, and capital, to produce goods and services. In a command economy, the government decides what products and services will be produced. In a capitalist society, th...

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How the Impresset System Works

How the Market System Works The market system works by producing what consumers want for the least cost. These wants are communicated by the prices that consumers are willing to pay for products and services. The essential feature of the ma...

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Demand Elasticity

Demand Elasticity The law of demand states that as the price decreases, the quantity demanded increases, but does not say by how much. Demand elasticity is the change in quantity demanded per change in a demand determinant. Although there a...

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Supply Elasticity

Supply Elasticity Suppliers profit by selling goods and services at higher prices than their cost to produce. The amount of profit is determined by the cost of the factors of production to produce the product and on the suppliers' efficienc...

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Consumer Surplus

Consumer Surplus Welfare economics is the study of how the allocation of resources affects economic well-being. Indeed, the objective of most economic activity is to provide what people most desire. Because people's disposable income is lim...

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Producer Surplus

Producer Surplus In Consumer Surplus, it was explained how most consumers enjoy a surplus of benefits that exceeds the purchase price, which is called consumer surplus, equal to the price that they are willing to pay minus the price paid. P...

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Total Surplus

Total Surplus A desirable objective of an economic system is to maximize the well-being of society. Do free markets do that? To answer that question, buyers must benefit from what they buy and sellers must benefit from what they sell. When...

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Total and Marginal Utility

Total And Marginal Utility Why is the fear of losing money in an investment greater than the desire of earning the same amount of money? Why, as some studies have shown, does the desire for greater income drop off sharply when a person is a...

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Externalities

Externalities If tickets were sold for a fireworks display, who would buy them, since anyone can watch the fireworks without paying for a ticket. If a steel foundry creates polluting chemicals when it makes steel, and if it could simply dum...

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Tax Efficiency and Tax Equity

Taxation: Efficiency and Equity Taxation is a system that governments use to collect taxes from people and businesses, based on their income, assets, or transaction values. The primary purpose of taxation is to raise revenue for the governm...

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Economic Profit

Economic Profit When an accountant examines a business, he concerns himself with production costs and how they affect the firm's profitability. However, when an economist looks at costs, she is more interested in why the firm's founders hav...

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Firm Production and Costs

Firm Production and Costs The allocation of economic resources is determined by economic profit, which in turn depends on how much consumers are willing to pay for particular products (or services) and how much it costs for firms to produce...

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Sunk Costs

Sunk Costs Sunk costs are costs that were paid. Since economic decisions are based on the marginal cost and the marginal benefit of a proposed action, the primary characteristic of sunk costs is that their marginal cost is zero, regardless...

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Pure Competition

Pure Competition A perfectly competitive market is rare, but those that exist are very large, such as the markets for agricultural products, stocks, foreign exchange, and most commodities. Pure competition also offers a simplified economic...

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Pure Competition: Long-Run Equilibrium

Pure Competition: Long-Run Equilibrium In the long run, firms can enter or exit a purely competitive market easily. Pure competition also assumes that firms and resources can be easily reallocated in response to demand. Hence, if economic p...

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Pure Monopoly

Pure Monopoly A pure monopoly exists when a single firm dominates a market for a particular product, such as the dominance that Microsoft has for operating systems or that the government has for particular public services. Although monopoli...

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Price Discrimination

Price Discrimination A company in a competitive market must accept the market price, but a monopoly can set a price that maximizes its own profit. Quantity and price are adjusted depending on the elasticity of demand for the product. If dem...

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Pure Monopoly: Economic Traces

Pure Monopoly: Economic Effects In examining the economics of pure competition, it was shown that to each firm, demand is completely elastic. Therefore each firm can sell all that it wants at the market price, so each individual firm will m...

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Monopoly Regulation

Monopoly Regulation Competitive firms sell at market prices, which maximizes both consumer surplus and total surplus. Consumer surplus is the additional benefit enjoyed by consumers over the price that they paid for the product. Monopolies,...

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Monopolistic Competition

Monopolistic Competition Monopolistic competition is a market structure characterized by many firms selling products that are similar but not identical, so firms compete on other factors besides price. Monopolistic competition is sometimes...

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Game Theory of Oligopolistic Pricing Strategies

Game Theory of Oligopolistic Pricing Strategies In competitive, monopolistically competitive, and monopolistic markets, the profit maximizing strategy is to produce that quantity of product where marginal revenue = marginal cost. This is al...

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Oligopoly Pricing Models

Oligopoly Pricing Models A pure monopoly maximizes profits by producing that quantity where marginal revenue = marginal cost. However, it is much more difficult for an oligopoly to determine at what output it can maximize its profit. There...

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Resource Demand Determinants

Resource Demand Determinants With all else equal, an increase in the demand for a product that uses a particular resource will also increase the demand for that resource; likewise, if demand for a product decreases, then the demand for the...

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Resource Demand Elasticity

Resource Demand Elasticity The elasticity of resource demand depends on whether there are close substitutes for the resource, how much the cost of the resource accounts for the cost of the product, and on the demand elasticity of the produc...

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Labor Unions

Labor Unions A primary benefit of capitalism is that goods and services are provided at lower cost because of competition among firms for market share. During the early stages of capitalism, when there were few laws or regulations regarding...

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Labor Union Models

Labor Union Models Although the main tool used by labor unions to increase wages and benefits is through collective bargaining, the result of union activities can be understood best through simplified economic models of the union's efforts...

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Wage Differentials

Wage Differentials The wage paid to workers varies greatly. These wage differentials are mostly the result of differences in worker ability and the workers' effort in performing the job, but may also result if the job is unionized, since th...

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Economic Rent

Economic Rent Most people think of rent as a periodic payment for the use of real estate. However, the term economic rent is used to define a fundamental aspect of any economy. Economic rent is the revenue that can be earned from the land o...

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Interest Rates and Loanable Funds

Interest Rates and Loanable Funds Interest is the price paid for the use of money. Borrowers exchange the ability to purchase today in exchange for purchasing in the future some of the money they receive in the future will be used to repay...

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Government Failure

Government Failure Governments are a necessary part of any society to lay down a foundation of rules and laws, to correct negative externalities, and to provide public goods. Most people consider democracy to be the ideal form of government...

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Introduction to Macroeconomics

Introduction to Macroeconomics Economics is the study of how a society allocates scarce resources to produce the products and services most desired by that society. Economics can be subdivided into microeconomics and macroeconomics. Microec...

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Macroeconomic Terms and Variables

Macroeconomic Terms and Variables Macroeconomics is the study of the economy as a whole. Understanding macroeconomics requires understanding its terms. Because macroeconomic systems are complex, economists build models to represent the inte...

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Nominal and Real GDP

Nominal and Real GDP, GDP Price Index, GDP Deflator A primary benefit of measuring the Gross Domestic Product (GDP ) is that it can show the growth of the economy over time, or its lack thereof. However, GDP as measured by current prices do...

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Economic Growth and Business Cycles

Economic Growth and Business Cycles One of the best measures of an economy is its growth rate. An economy growing 2% annually will quadruple in about 70 years, which is a little less than life expectancy, while an economy growing at 3% annu...

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Government Debts and Deficits

Government Debts and Deficits Like most consumers, governments also have debts, which increases annually by the amount of the deficit. Debt is a stock variable, meaning that it represents the amount of debt at a specific time. A deficit is...

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Unemployment

Unemployment The major problem of economic recessions and depressions is high unemployment. When unemployment is severe or prolonged, it can lead to social disintegration, loss of job skills, and increased difficulty of finding a new job. I...

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Fiscal Policy

Fiscal Policy Central banks try to optimize the economy through monetary policy, by controlling the supply of money and interest rates, for instance. Fiscal policy also profoundly affects the economy, and, since much fiscal policy depends o...

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Economic Growth in the Long Run

Economic Growth in the Long Run Economic wealth grows as the economy grows. All the conveniences and benefits of modern life, such as entertainment, fast and efficient transportation and communications, advanced healthcare, and a longer and...

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Aggregate Demand

Aggregate Demand Microeconomics is the study of supply and demand in local markets, while macroeconomic studies supply and demand in the aggregate, the markets of the entire economy. Aggregate demand and aggregate supply affect the Gross Do...

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Aggregate Supply

Aggregate Supply For firms, there is demand and supply; for the economy, there is aggregate demand and aggregate supply. Aggregate supply (AS ) is the total output of final goods and services produced by the domestic economy, equal to aggre...

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Supply-Side Economics

Supply-Side Economics A primary benefit of learning economics is that government policies can be evaluated according to scientific principles. Government policies are often set by political agendas that usually favor the wealthy, because th...

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Economic Benefits of International Trade

Economic Benefits of International Trade Adam Smith noted long ago that specialization of labor allows each worker to become efficient at his particular job. Some companies are also more efficient than others, which makes them more successf...

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Standard of Living; Inequality

Comparing Living Standards around the World Gross Domestic Product ( GDP ) measures the wealth of a nation and, therefore, the combined wealth of all its people, but it does not indicate how that wealth is distributed. Because the distribut...

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Marshall-Lerner Condition

Marshall-Lerner Condition Can the depreciation of the currency increase net exports? This will depend on the price elasticities of demand (PED ) for exports (PED X )and imports (PED M ). When the currency is depreciated, exports decline in...

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Behavioral Economics: An Introduction

Behavioral Economics Conventional economics is predicated on utility maximization, market equilibriums, and economic efficiency. Conventional economics is based on rationality, rationality being defined as being consistent with maximizing w...

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