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  • Song her

    Accelerator 01

    June 3, 2010 by Song her

    The accelerator model is very similar to the multiplier. The accelerator theory of investments assumes that firms’ output levels from the basis for expectations of future needs for capital. Or investments is assumed to be primarily linked to change in demand for output rather than to a change in interest rates. Firms experiencing an increase in demand will need to increase total capital. If output is growing at a constant rate, firms will also increase their capital spending at a constant rate. Whole an increase in growth will cause firms to increase desired investment levels.


    To have a better understanding of this thory lets look at an exapmle...

    Assume that a firm producing bottles for the soft drink industry bases expenditure on previous o…


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  • Song her

    Accelerator

    June 3, 2010 by Song her

    The accelerator model is very similar to the multiplier. The accelerator theory of investments assumes that firms’ output levels from the basis for expectations of future needs for capital. Or investments is assumed to be primarily linked to change in demand for output rather than to a change in interest rates. Firms experiencing an increase in demand will need to increase total capital. If output is growing at a constant rate, firms will also increase their capital spending at a constant rate. Whole an increase in growth will cause firms to increase desired investment levels.

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  • Song her

    It is alright to say that monopolies have a rather poor reputation amongst both us consumers also the political entities we elect to safeguard out interests. Monopolies in fact have number of advantages-sometimes outweighing the disadvantages.

    As the monopoly restricts output and raises the price, the producer gains at the expenses of the consumers. This loss of consumer sovereignty if the mist noticeable negative effect of monopoly market situations; consumers ‘pay more for less’. Due to the fact it is an monopoly firm the firm will face higher prices and lower output. It follows common sense that a firm whish can affect but not demand will set a price which will optimize profit by a way of increasing the marginal cost and firm’s cost. To… Read more >
  • Song her

    So what are collusive and non-collusive oligopoly? Collusion takes on many forms. Setting the price is perhaps the most common method, yet there are many other ways to lower the competitive forces which harm oligopolies’ profits. Most forms of collusion will in any case be convert ( aka secret) rather than overt (aka open). Yet some this type of competition-limiting behavior is illegal since most countries have strict regulations and rules against this type of collusion.

    Convert collusion (aka tacit) is when no formalized agreement is set down and forms simply follow each others lead in pricing and output in offer to avoid confrontations. In this case there could be a price leader that the rest will follow, or firms could follow benchmark p…


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