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Adam Smith's theories of microeconomics
Modern economics founder, created classical economics, and promoted laissez-faire policies and was a free market capitalist. Known as the invisible hand for self regulated markets
Elasticity
Refers to how one variable changes in response to another. Prize elasticity of demand equals percent change in the quantity demanded divided by percent change in the price.
Perfect competition
All companies make products that are exactly the same. They are identical, and because of this common no one firm has a large market share. Firms do not have control over pricing.
Monopolistic competition
Many different producers that sell similar but not identical products. A form of imperfect competition.
Oligopoly
Occurs when there are only a small amount of businesses supplying a certain product, meaning there is very limited competition. Higher pricing and profits.
Monopoly
Occurs when one company is the only provider of a product. There is no competition and no reasonable substitute that consumers can purchase.
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