Monopoly: A market with one seller, many buyers, a unique product, and high barriers to entry. The monopolist has absolute control over production quantity. Profits are maximized where marginal revenue equals marginal cost (P > MC).
Perfectly Competitive Market: A market where economic profits are zero in the long term, featuring many sellers and buyers with perfect information. Here, P = MC.
Market Power: The ability of sellers or buyers to influence the price of goods. It manifests as monopoly power or monopsony power.
Cartel: An organization that reduces or eliminates competition. By controlling production and distribution through collusion, constituent companies gain market power to maximize benefits at the expense of consumers. To succeed, a cartel must control the total supply or ensure demand is price-inelastic.
Macroeconomic Indicators
GDP (Gross Domestic Product): The market value of all final goods and services produced within a country's geographical borders during a specific period. It measures total income and total expenditure.
GNP (Gross National Product): The production value of a country's permanent residents, regardless of where the production occurs.
Nominal GDP: The value of goods and services at current market prices.
Real GDP: The value of goods and services at constant prices, serving as a key indicator of economic welfare.
GDP Deflator: A price level indicator calculated by dividing nominal GDP by real GDP and multiplying by 100.
Public Sector and Market Intervention
Public Sector: Acts as a buyer and seller of goods and services, establishes the legal framework for the market economy, imposes taxes, and promotes economic stability, income redistribution, and efficiency.
Minimum Price (Price Floor): Government intervention to raise prices above market equilibrium levels.
Maintenance of Prices: The government sets a price above the free market level and purchases the surplus production to sustain that price.
Production Quota: State intervention to increase prices by artificially reducing supply.
Quota and Duty: Tools used to keep the domestic price of a product above world market levels.
