What is Market Power? Market power is an economic term that refers to the ability of a company to successfully raise the prices of goods or services in the general market. In other words, when a commercial enterprise is able to influence products or services price by taking control over its demand, supply or both, then this becomes a market power. M...

What is the Bottleneck Principle? The bottleneck principle, or a bottleneck, occurs when a system of production such as facility, machine, or equipment is overwhelmed by production to the extent that it cannot meet demands for more production. When there is congestion or a backup, a bottleneck has occurred. The term "bottleneck" is derived from the ...

What is a Competitive Bid? Competitive bids refer to prices that a vendor, supplier, or service provider quotes to a firm for its goods or services.  When a firm needs a large volume of goods or is seeking professional services, it may send out an offer or an appeal in the form of a request for proposal (RFP). Requests for proposal are commonly used...

What is a Rule 506 exemption? Rule 506 of Regulation D allows for two exemptions of securities issuances. The statutory authority for a Rule 506 is pursuant to Section 4(a)(2) of the 33 Act. Rule 506 exemptions are the most commonly employed exemptions to securities registration. What is a Rule 506(c) Exemption? The JumpStart our Businesses Act of 2...

What is the Limited Flexibility Exchange Rate System? The International Monetary Fund's name for an exchange rate system with a managed float is the Limited Flexibility Exchange Rate System.  A flexible exchange-rate system is a monetary system that allows the exchange rate to be determined by supply and demand.  Every recognized sovereign creating ...

What are environmental laws? Environmental law is a combination of state and federal laws aimed at protecting individuals from the negative consequences of environmental degradation. More specifically, environment law addresses pollution, natural resource management (including forests, minerals, and wildlife), and the environmental impact of human a...

What are the Categories of Management Control? Organizational controls can come in various forms, with various characteristics. Understanding how to classify organizational controls can be very useful.  Some common categorizations are as follows: Strategic Controls - Strategic goals derive from the company's strategy. They may certain the company is...

What is Aggregate Supply and Aggregate Demand in Macroeconomics and Microeconomics? Confusion sometimes arises between the aggregate supply and aggregate demand model and the microeconomic analysis of demand and supply in particular markets for goods, services, labor, and capital.  These aggregate supply and demand models and the microeconomic analy...

What are Keynesian vs Neoclassical Macroeconomic Policy Recommendations? Let’s summarize what neoclassical economists recommend for macroeconomic policy. Neoclassical economists do not believe in “fine tuning” the economy. They believe that a stable economic environment with a low rate of inflation fosters economic growth. Similarly, tax rates shoul...

How quickly do wages and prices adjust in the Macroeconomic environment? How long does it take for wages and prices to adjust, and for the economy to rebound to its potential GDP? This subject is highly contentious. Keynesian economists argue that if the adjustment from recession to potential GDP takes a very long time, then neoclassical theory may ...