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Economic Terms

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Over production

When the market produces more than the market requires leading to excess supply.


This is a period of economic activity when AD exceeds the productive capacity of an economy and is characterised by high levels of growth and accelerating inflation without any sustainable extension in real output.

Overt Collusion

This is a type of collusion in which formal and explicit co-operation and agreements take place between rival firms. This type of collusion normally leads to a cartel forming amongst firms.

The diagram below shows the individual and market outcome of this form of collusion. In this instance, if all firms charge a price of P, ths leads to all firms producing a fixed quota of goods making a level of supernormal profit equal to the red shaded box below. Therefore, this ensures that industry profits are maximised.


Owner occupied

A phrase used to describe a property that is occupied by the person that owns it.

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