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EQUILIBRIUM, LONG-RUN AGGREGATE MARKET: The state of equilibrium that exists in the long-run aggregate market when real aggregate expenditures are equal to full employment real production with no imbalances to induce changes in the price level or real production. The opposing forces of aggregate demand (the buyers) and long-run aggregate supply (the sellers) exactly offset each other. Equilibrium in the long-run aggregate market also involves simultaneous equilibrium in the aggregated financial and resource markets. Long-run price flexibility ensures that all three aggregate markets are in equilibrium.
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Lesson 11: Circular Flow | Unit 1: Basic Flow
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Page: 4 of 22
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Topic:
The Physical Flow
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Two sectors: household and business. Two markets: product and factor. - The physical flow is the counter-clockwise flow of resources from the household to business sector and production from the business to household sector.
- Production flows from the business sector (supply) to the household sector (demand) through the product markets.
- Resources flow from the household sector (demand) to the business (supply) sector through the factor markets.
- The household sector sells the resources through the factor markets and buy goods through the product markets.
- The business sector buys resources through the factor markets and sells goods through the product markets.
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AVERAGE FIXED COST Total fixed cost per unit of output, found by dividing total fixed cost by the quantity of output. When compared with price (per unit revenue), average fixed cost (AFC) indicates whether or not a profit-maximizing firm should shutdown production in the short run. Average fixed cost is one of three average cost concepts important to short-run production analysis. The other two are average total cost and average variable cost. A related concept is marginal cost.
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ORANGE REBELOON
[What's This?]
Today, you are likely to spend a great deal of time at a going out of business sale seeking to buy either a wall poster commemorating the first day of spring or a lazy Susan for you dining room table. Be on the lookout for rusty deck screws.
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A thousand years before metal coins were developed, clay tablet "checks" were used as money by the Babylonians.
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"Laughter is the shortest distance between two people. " -- Victor Borge, musician, humorist
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MR
Marginal Revenue
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