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ADJUSTMENT, SHORT-RUN AGGREGATE MARKET: Disequilibrium in the short-run aggregate market induces changes in the price level that restore equilibrium. If the price level is above the short-run equilibrium price level, economy-wide product market surpluses cause the price level to fall. If the price level is below the short-run equilibrium price level, economy-wide product market shortages cause the price level to rise. In both cases short-run equilibrium is restored. You might want to compare adjustment, long-run aggregate market. Price level changes induce changes in both aggregate expenditures and real production. Unlike the long-run aggregate market, changes in the price level can induce changes in short-run aggregate supply, making it greater or less than full-employment real production.
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Lesson Contents
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Unit 1: Demand Theory |
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Unit 2: Total Utility |
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Unit 3: Marginal Utility |
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Unit 4: The Curves |
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Unit 5: Taking Stock | |
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Consumer Demand
This lesson discusses the basics of consumer demand theory, especially the notion of utility. Utility is the fancy-schmancy economic term that means satisfying wants and needs. The purpose of this lesson is to set the stage for a behind-the-scenes look at the demand-side of the market. Because the prices buyers are willing to pay for the goods depend on the utility, an understanding of demand requires an understanding of utility. - The first unit of this lesson, Demand Theory, introduces the concept of utility and previews the relation between utility, consumer decision making, and demand.
- In the second unit, Total Utility, we take a look at the first of two key technical notions of utility are used to examine the relation between utility and demand.
- The third unit, Marginal Utility, presents and discusses the second of the two technical notions of utility, and the most important notion underlying demand.
- The fourth unit, The Curves, illustrates the total utility and marginal utility concepts with handy graphs.
- The fifth unit, Taking Stock, then wraps up this lesson with an extended preview of the relation between utility and demand.
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AVERAGE FACTOR COST AND MARGINAL FACTOR COST A mathematical connection between average factor cost and marginal factor cost stating that the change in the average factor cost depends on a comparison between average factor cost and marginal factor cost. For perfect competition, with no market control, marginal factor cost is equal to average factor cost, and average factor cost does not change. For monopsony and other firms with market control, marginal factor cost is greater than average factor cost, and average factor cost rises.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time calling an endless list of 800 numbers seeking to buy either a genuine down-filled snow parka or throw pillows for your living room sofa. Be on the lookout for door-to-door salesmen.
Your Complete Scope
This isn't me! What am I?
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A U.S. dime has 118 groves around its edge, one fewer than a U.S. quarter.
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"There's only one corner of the universe you can be certain of improving and that's your own self. " -- Aldous Huxley, writer
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LTFV
Less Than Fair Value
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