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BUSINESS CYCLE INDICATORS: Assorted economic statistics that provide valuable information about the expansions and contractions of business cycles. These statistics are grouped into three sets--lagging, coincident, and leading. Leading economic indicators tend to move up or down a few months BEFORE business-cycle expansions and contractions. Coincident economic indicators tend to reach their peaks and troughs AT THE SAME TIME as business cycles. Lagging economic indicators tend to rise or fall a few months AFTER business-cycle expansions and contractions.
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Lesson 16: Perfect Competition | Unit 4: Long-Run Equilibrium
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Page: 21 of 28
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- One of the key characteristics of perfect competition is perfect resource mobility.
- The phrase that captures the mobility of resources in a perfectly competitive industry is entry and exit. It works like this:
- New firms will enter the industry if economic profit is positive.
- Existing firms in the industry exit if economic profit is negative.
- Firms will neither enter nor exit an industry if economic profit is zero and all firms earn a normal profit.
- The movement of firms into and out of the industry guarantees one outcome -- zero economic profit.
- Zero economic profit is achieved when the market price is equal to average cost -- both short run (SRATC) and long run (LRAC).
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UNSTABLE EQUILIBRIUM Equilibrium that is not restored if disrupted by an external force. Few economic models have an equilibrium that is unstable, reflecting the observation that the real world adapts to changes and maintains a fair degree of stability. However, there are situations where an unstable equilibrium more accurately reflects economic phenomena. The alternative to an unstable equilibrium is a stable equilibrium.
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In the Middle Ages, pepper was used for bartering, and it was often more valuable and stable in value than gold.
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"You have to find something that you love enough to be able to take risks, jump over the hurdles and break through the brick walls that are always going to be placed in front of you. If you don't have that kind of feeling for what it is you're doing, you'll stop at the first giant hurdle. " -- George Lucas
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IEBNR
Income Earned But Not Received
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