Macroeconomics studies national economies, and microeconomics studies the behavior of individual people and individual firms. Asymmetric information: If a buyer or seller has private information that gives her an edge when negotiating a deal, the opposite party may be too suspicious for both parties to reach a mutually agreeable price. Monopoly power: Monopoly power is the ability to raise prices and restrict output in order to increase profits. 39 $26.99 $26.99. It reduces output to drive up prices and increase profits. It's more important than ever for investors to know the true financial stability of a business, and this new edition of Fundamental Analysis For Dummies shows you how. Decreasing taxes increases economic activity indirectly by leaving households with more after-tax dollars to spend. It's more important than ever for investors to know the true financial stability of a business, and this new edition of Fundamental Analysis For Dummies shows you how. Macroeconomics studies national economies, and microeconomics studies the behavior of individual people and individual firms. Economists assume that people work toward maximizing their utility, or happiness, and firms act to maximize profits. By doing so, it produces less than the socially optimal output level and produces at higher costs than competitive firms. Macroeconomics studies national economies, concentrating on economic growth and how to prevent and ameliorate recessions. Several prerequisites must be fulfilled before perfect competition can work properly and generate that output level. An industry’s market structure depends on the number of firms in the industry and how they compete. Oligopoly: An oligopoly is an industry with only a few firms. Anti-recessionary economic policies come in two flavors: Expansionary monetary policy: The government can increase the money supply to lower interest rates. Restaurants, for example, all serve food but of different types and in different locations. With fundamental analysis, your goal is to monitor a company to see how it brings in money by selling goods and services to generate revenue. People have to make choices because of scarcity, the fact that they don’t have enough resources to satisfy all their wants. Both monopolies (firms that are the only sellers in their industries) and collusive oligopolies (industries with only a few firms that coordinate their activities) can possess monopoly power. What’s left after paying all the bills is profit, or earnings. Causes of market failure include the following: Externalities caused by incomplete or nonexistent property rights: Without full and complete property rights, markets are unable to take all the costs of production into account. Economics studies how people allocate resources among alternative uses. Becoming City-Data-Savvy to Develop a Smart City, How to Implement Data Governance in a Smart City, Establishing a Vision for Your Smart City. Fundamental analysis is a method of determining a stock's real or "fair market" value. Economists use gross domestic product (GDP) to keep track of how an economy is doing. The market may collapse, with no trades being made. There are gains from producing and then consuming those units. Increasing purchases increases economic activity directly, giving businesses money to hire new workers or pay for increased orders from their suppliers. Monopoly: A monopoly is a firm that has no competitors in its industry. The author although from a journalistic background has obviously spent a lot of time coming to terms with the concepts and methodology of Fundamental Analysis. The market equilibrium price, p*, and equilibrium quantity, q*, are determined by where the demand curve of the buyers, D, crosses the supply curve of the sellers, S. At that price, the amount that the buyers demand equals the amount that the sellers offer. Next, you’ll determine how much of revenue a company manages to keep after paying its expenses. Here are the four basic market structures: Perfect competition: Perfect competition happens when numerous small firms compete against each other.

Governments fight recessions and encourage growth using monetary policy and fiscal policy. Whether you're a seasoned investor or just want to learn how to make more intelligent and prudent investment decisions, this plain-English guide gives you practical tips, tricks, and trade secrets for using fundamental analysis to manage your … For each unit from 0 up to q*, the demand curve is above the supply curve, meaning that people are willing to pay more to buy those units than they cost to produce. Lower interest rates make loans for cars, homes, and investment goods cheaper, which means increased consumption spending by households and increased investment spending by businesses. by Matthew Krantz | Apr 8, 2016. Economics studies how people allocate resources among alternative uses. GDP measures the value of all final goods and services produced in an economy in a given period of time, usually a quarter or a year.

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