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VERY LONG RUN, MICROECONOMICS: A production time period in which all inputs are variable, including those under control of the firm and those beyond the control of the firm. During the very long run, not only are the labor, capital, land, and entrepreneurship inputs variable, but so too are key production inputs such as government rules, technology, and social customs. This is one of four production time periods used in the study of microeconomics. The other three are short run, long run, and very short run.

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Lesson Contents
Unit 1: Adjustments
  • Overview
  • Three Questions
  • Unit 1 Summary
  • Unit 2: Determinants
  • Shifts
  • Demand
  • Supply
  • Unit 2 Summary
  • Unit 3: Single Shifts
  • More Demand
  • Less Demand
  • More Supply
  • Less Supply
  • Unit 3 Summary
  • Unit 4: Double Shifts
  • More Demand and More Supply
  • More Demand and Less Supply
  • Less Demand and Less Supply
  • Less Demand and More Supply
  • Unit 4 Summary
  • Unit 5: Cause and Effect
  • Economic Science
  • Link Sequence
  • Unit 5 Summary
  • Course Home
    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 do markets react when shocked? 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, Adjustments, lays the foundation for analyzing market shocks with an overview of the adjustment process and the role played by the ceteris paribus assumption.
    • In the second unit, Determinants, we review the five determinants of demand and five determinants of supply that cause market disruptions.
    • We then move into the actual adjustment process in the third unit, Single Shifts, examining four disruptions that involve a shift in either the demand or supply curve.
    • The fourth unit, Double Shifts, builds on these four basic shifts to exam four complex shocks that have simultaneous shifts in both the demand and supply curves.
    • We end this lesson in the fifth unit, Cause and Effect, by relating market shocks to the fundamental notion of cause and effect inherent in the study of economic science.

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    KEYNESIAN AGGREGATE SUPPLY CURVE

    An aggregate supply curve--a graphical representation of the relation between real production and the price level--that reflects the basic principles of Keynesian economics. The Keynesian aggregate supply curve actually comes in two versions. The basic version is reverse-L shaped, with a horizontal segment connected to a vertical segment at a sharp corner. The modified version is also reverse-L shaped, but the vertical and horizontal segments have positive slopes and connecting corner is rounded. An alternative is the classical aggregate supply curve.

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    APLS

    ORANGE REBELOON
    [What's This?]

    Today, you are likely to spend a great deal of time wandering around the shopping mall wanting to buy either a rotisserie oven that can also toast bread or a flower arrangement in a coffee cup for your father. Be on the lookout for malfunctioning pocket calculators.
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    This isn't me! What am I?

    Al Capone's business card said he was a used furniture dealer.
    "Try not to become a man of success, but rather try to become a man of value. "

    -- Albert Einstein

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