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SHORT RUN: In terms of the macroeconomic analysis of the aggregate market, a period of time in which some prices, especially wages, are rigid, inflexible, or otherwise in the process of adjusting. Short-run wage and price rigidity prevents some markets, especially resources markets and most notably labor markets, from achieving equilibrium. In terms of the microeconomic analysis of production and supply, a period of time in which at least one input in the production process is variable and one is fixed. In the microeconomic analysis, the short run is primarily used to analyze production decisions for a firm.
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Lesson Contents
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Unit 1: The Concept |
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Unit 2: Two Options |
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Unit 3: The Curves |
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Unit 4: Determinants |
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Unit 5: Connections | |
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Aggregate Supply
In much the same way that the market supply lesson parallels the market demand lesson, this lesson on aggregate supply parallels the aggregate demand lesson. Aggregate supply however, is somewhat more involved that market supply, in particular, because aggregate supply is separated into two relations -- on for the short run and one for the long run. This lesson examines the relation between the price level and real production and the determinants that cause a change in aggregate supply, with a close eye on the differences between aggregate supply in the short run and the long run. - This lesson begins with an introduction to the aggregate supply half of the aggregate market in the first unit.
- The second unit then explores the different aggregate supply relations that exist between the price level and real production in the short run and the long run.
- The third unit introduces the short run aggregate supply curve and the long run aggregate supply curve which capture these two alternative relations.
- We think pick up the keep curve shifting determinants of aggregate supply in the fourth unit, especially the resource quantity, resource quality, and resource prices.
- The fifth unit wraps up this lesson with a discussion of the self-correction mechanism that relies on changes in the aggregate supply and how this relates to business cycle stabilization.
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UTILITY The satisfaction of wants and needs obtained from the use or consumption of goods and services. The terms utility and satisfaction are, for the most part, used interchangeably in economics. The concept of utility is integral to utility analysis, consumer demand theory, and the microeconomic analysis of consumer behavior and market demand.
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A lump of pure gold the size of a matchbox can be flattened into a sheet the size of a tennis court!
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"My philosophy of life is that if we make up our mind what we are going to make of our lives, then work hard toward that goal, we never lose - somehow we win out." -- President Ronald Reagan
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GATS
General Agreement on Trade in Services
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