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AGGREGATE SUPPLY: The total (or aggregate) real production of final goods and services available in the domestic economy at a range of price levels, during a given time period. Aggregate supply (AS) is one half of the aggregate market analysis; the other half is aggregate demand. Aggregate supply, relates the economy's price level, measured by the GDP price deflator, and aggregate domestic production, measured by real gross domestic product. The aggregate supply relation is generally separated into long-run aggregate supply, in which all prices and wages and flexible and all markets are in equilibrium, and short-run aggregate supply, in which some prices and wage are NOT flexible and some markets are NOT in equilibrium.
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Lesson 8: Market Shocks | Unit 3: Single Shifts
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Page: 9 of 20
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The six steps for a decrease in demand:- A determinant changes. The price of pecan pie, a substitute for hot fudge sundaes, declines.
- A curve to shifts. The demand curve for hot fudge sundaes shifts leftward.
- A shortage or a surplus occurs. The decrease in demand causes a surplus of hot fudge sundaes.
- The price changes. The price of hot fudge sundaes goes down.
- The quantities demanded and supplied change. The quantity supplied for hot fudge sundaes decreases while their quantity demand is increased.
- The market imbalance is eliminated and equilibrium is restored. The surplus of hot fudge sundaes is eliminated. The price is lower and the quantity exchanged is less.
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AVERAGE REVENUE CURVE A curve that graphically represents the relation between average revenue received by a firm for selling its output and the quantity of output sold. Because average revenue is essentially the price of a good, the average revenue curve is also the demand curve for a firm's output. The average revenue curve for a firm with no market control is horizontal. The average revenue curve for a firm with market control is negatively sloped.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors seeking to buy either a Boston Red Sox baseball cap or a square lamp shade with frills along the bottom. Be on the lookout for mail order catalogs with hidden messages.
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Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.
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"It is very rare that you meet with obstacles in this world (that) the humblest man has not the faculties to surmount. " -- Henry David Thoreau, philosopher
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IQ
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