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COMPARATIVE STATICS: The technique of comparing the equilibrium resulting from a change in a determinant with the equilibrium prior to the change. Comparative statics is the primary analytical technique used in the study of economics. A popular example of this technique is found in the study of markets. Comparative statics is used to analyze how the equilibrium price and equilibrium quantity are affected by changes in the demand and supply determinants, which are graphically represented by shifts of the respective demand or supply curves.
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Lesson 5: Demand | Unit 4: Determinants
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Page: 13 of 20
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Topic:
Ceteris Paribus Factors
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Ceteris paribus is the notion that other things remain constant. We make this assumption because things other than price affect demand.- These other, ceteris paribus factors, give us useful analytical tools for examining demand and the market.
- We can turn these factors off and on to better understand how the market works.
- The ceteris paribus factors are called demand determinants.
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SLOPE, GOVERNMENT PURCHASES LINE The positive slope of the government purchases line is also termed the marginal propensity for government purchases (MPG). This slope is greater than zero but less than one, reflecting induced government purchases. The slope of the government purchases line affects the slope of the aggregate expenditures line and thus also affects the magnitude of the multiplier process.
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WHITE GULLIBON
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Today, you are likely to spend a great deal of time strolling through a department store looking to buy either a coffee cup commemorating the first day of winter or a video game player. Be on the lookout for neighborhood pets, especially belligerent parrots.
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One of the largest markets for gold in the United States is the manufacturing of class rings.
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"The past is a foreign country; they do things differently there." -- Leslie Poles Hartley, Writer
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AEA
American Economic Association
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