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 AGGLOMERATION: The clustering of several similar or related activities at the same location. Many industries have firms that tend to agglomerate, that is, locate very close to one another, leading to geographic concentration. For example, the motion picture industry is concentrated in California, the fashion industry is concentrated in New York, and the petroleum industry is concentrated in Texas. Agglomeration can be caused by accessibility to a concentrated natural resource (such as petroleum or sunny weather), but if often feeds upon itself through agglomeration economies. Firms in the same industry often have lower production cost when the located near their competitors.
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 Lesson 15: Aggregate Market | Unit 3: Doing Curves Page: 13 of 22

 Topic: Long Run Disequilibrium: Too Low <=PAGE BACK | PAGE NEXT=>

We can see what happens if the price level is not at the long-run equilibrium price level of Pe. If price level is the too low the supply of real production is less than demand. We have shortages in product markets throughout the economy. Market prices increase and so too does the price level. Aggregate expenditures then decrease to reach full employment.

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AVERAGE PRODUCT CURVE

A curve that graphically illustrates the relation between average product and the quantity of the variable input, holding all other inputs fixed. This curve indicates the per unit output at each level of the variable input. The average product curve is one of three related curves used in the analysis of the short-run production of a firm. The other two are total product curve and marginal product curve.

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 The wealthy industrialist, Andrew Carnegie, was once removed from a London tram because he lacked the money needed for the fare.
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