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AGGREGATE SUPPLY CURVE: A graphical representation of the relation between real production and the price level, holding all ceteris paribus aggregate supply determinants constant. There are actually two separate aggregate supply curves, one for the long run and one for the short run. These aggregate supply curves are one side of the graphical presentation of the aggregate market. The other side is occupied by the aggregate demand curve.
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Lesson Contents
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Unit 1: Adjustments |
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Unit 2: Determinants |
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Unit 3: Single Shifts |
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Unit 4: Double Shifts |
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Unit 5: Cause and Effect | |
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Market Shocks
Our goal in this lesson is to investigate disruptions of the market. Specifically, we want to use the market model previously developed, to examine the why and how of market shocks. What causes market shocks? How to markets react when shocked? These are just a few of the questions we want to consider. If the truth be known, markets in the real world don't remain at the same locations for very long. They move. They adjust. Prices change. Quantities change. We can understand these real world market changes, by analyzing what happens to market model when it's shocked. - The first unit of this lesson lays the foundation of analyzing market shorts with an overview of the adjustment process and the particular role played by the ceteris paribus assumption.
- In the second unit, we review the five determinants of demand and five determinants of supply, because these are the are what cause market disruptions.
- We then move into the actual adjustment process in the third unit, examining the four basic disruptions involving a shift in either the demand or supply curve.
- The fourth unit builds on these four basic shifts to exam four complex shifts that have simultaneous shifts in both the demand and supply curves.
- We end this lesson in the fifth unit by relating these market shocks to the fundamental notion of cause and effect inherent in the study of economic science.
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TIEBOUT HYPOTHESIS The notion that people relocate from one political jurisdiction to another in search of a more preferred package of government taxes and spending. Named after economist Charles Tiebout, this hypothesis suggests that people "shop" for compatible government activity in the same way they might shop for a car, a house, or a flavor of ice cream. However, shopping for a preferred government package is influenced by other factors affecting migration.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time wandering around the downtown area wanting to buy either a genuine down-filled comforter or a 200-foot blue garden hose. Be on the lookout for neighborhood pets, especially belligerent parrots.
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This isn't me! What am I?
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The penny is the only coin minted by the U.S. government in which the "face" on the head looks to the right. All others face left.
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"The best way to cheer yourself up is to try to cheer somebody else up." -- Mark Twain
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LME
London Metal Exchange
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