COMMERCE 1B03 Chapter 2: Chapter 2 text summary.docx
4 Feb 2014
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Produce products that seem to be identical. No true examples of perfect competition: monopolistic competition exists when a large number of sellers produce products that are very similar but are perceived by buyers as different. Product differentiation is the key to success: oligopoly occurs when a few sellers dominate a market. E. g. , oil and gas, tobacco, automobiles, aluminum, aircraft. Boom: brings jobs, growth, and economic prosperity: e. g, the late 1990s and 2000s. Recession is two or more consecutive quarters of decline in the gdp. In a recession, prices fall, people purchase fewer products, and businesses fail: high unemployment, increased business failures, and decrease in living standards. Depression is a severe recession usually accompanied by deflation: rarely go through a depression phase, there was only one during 1929-1933. A recovery occurs when the economy stabilizes and starts to grow. Leads to an economic boom, and cycle starts all over again.
