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LONG-RUN AGGREGATE MARKET: A macroeconomic model relating the price level and real production under the assumption that ALL prices flexible. This is one of two aggregate market submodels used to analyze business cycles, aggregate production, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The other is the short-run aggregate market. The long-run aggregate market isolates the interaction between aggregate demand and long-run aggregate supply. The key assumption of this model is that ALL prices, especially resource prices, are flexible. The primary result of this model is that the economy achieves long-run equilibrium at full-employment real production.
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                           PRODUCTION: The process of transforming the natural resources of the land into consumer satisfying consumption goods or productive capital goods. This transformation process involves the four scarce resources or factors of production--labor, capital, land, and entrepreneurship. Although production is generally the physical transformation of materials, it often involves the spatial relocation, or transportation, of commodities, as well. Scarcity is better addressed and living standards are enhanced by transforming natural resources of the land into more valuable and more satisfying goods. In their natural state raw materials generally provide less satisfaction of wants and needs than they do once processed, transformed, or fabricated into products.For example, most people obtain greater satisfaction from driving around in a finely crafted sports car than what they might be able to obtain directly from lumps of iron ore, silicon dioxide, bauxite ore, and other car-making materials buried in the Earth's crust. Most people prefer eating a finely crafted hot fudge sundae than what they might be able to obtain directly from the raw, unprocessed cocoa beans, vanilla beans, almond nuts, and maraschino cherries hanging on their respective trees and bushes. Although production is generally seen as the physical transformation of natural resources, it can also involve the spatial transportation of commodities. A commodity must be in the desired form as well as the desired location to be effectively used. For example, Duncan Thurly enjoys eating hot fudge sundaes (more so than having unprocessed cocoa beans, vanilla beans, almond nuts, and maraschino cherries hanging on their respective trees and bushes). However, the hot fudge sundae provides little satisfaction if it is located in the Hot Mamma Fudge Ice Cream Shoppe, but Duncan Thurly is in home in suburban Shady Valley ten miles away. Either Duncan needs to visit the Hot Mamma Fudge Ice Cream Shoppe or the hot fudge sundae needs to be shipped to Duncan's suburban residence. Either action requires the use of scarce resources. In the same manner that scarce resources are used to transform materials into a more suitable physical form, scarce resources are also needed to transport a commodity to a suitable spatial location.
Recommended Citation:PRODUCTION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2020. [Accessed: April 2, 2020].
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time wandering around the downtown area trying to buy either a how-to book on fine dining or a coffee cup commemorating the first day of winter. Be on the lookout for door-to-door salesmen.
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During the American Revolution, the price of corn rose 10,000 percent, the price of wheat 14,000 percent, the price of flour 15,000 percent, and the price of beef 33,000 percent.
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"I have no expectation of making a hit every time I come to bat. What I seek is the highest possible batting average." -- President Franklin Delano Roosevelt
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APT
Arbitrage Pricing Theory
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