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DISPERSIVE FORCE: A force that causes activities to locate farther apart. The primary dispersive forces are due to competition for local inputs or outputs, especially if this competition increases the prices of the inputs or limits the available demand for the outputs. Dispersive forces are countered by attractive forces, which act to bring activities closer together.

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Lesson Contents
Unit 1: Adjustments
  • Overview
  • Three Questions
  • Unit 1 Summary
  • Unit 2: Determinants
  • Shifts
  • Demand
  • Supply
  • Unit 2 Summary
  • Unit 3: Single Shifts
  • More Demand
  • Less Demand
  • More Supply
  • Less Supply
  • Unit 3 Summary
  • Unit 4: Double Shifts
  • More Demand and More Supply
  • More Demand and Less Supply
  • Less Demand and Less Supply
  • Less Demand and More Supply
  • Unit 4 Summary
  • Unit 5: Cause and Effect
  • Economic Science
  • Link Sequence
  • Unit 5 Summary
  • Course Home
    Market Shocks

    Our goal in this lesson is to investigate disruptions of the market. Specifically, we want to use the market model previously developed, to examine the why and how of market shocks. What causes market shocks? How do markets react when shocked? If the truth be known, markets in the real world don't remain at the same locations for very long. They move. They adjust. Prices change. Quantities change. We can understand these real world market changes, by analyzing what happens to market model when it's shocked.

    • The first unit, Adjustments, lays the foundation for analyzing market shocks with an overview of the adjustment process and the role played by the ceteris paribus assumption.
    • In the second unit, Determinants, we review the five determinants of demand and five determinants of supply that cause market disruptions.
    • We then move into the actual adjustment process in the third unit, Single Shifts, examining four disruptions that involve a shift in either the demand or supply curve.
    • The fourth unit, Double Shifts, builds on these four basic shifts to exam four complex shocks that have simultaneous shifts in both the demand and supply curves.
    • We end this lesson in the fifth unit, Cause and Effect, by relating market shocks to the fundamental notion of cause and effect inherent in the study of economic science.

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    LONG RUN, MACROECONOMICS

    In terms of the macroeconomic analysis of the aggregate market, a period of time in which all prices, especially wages, are flexible, and are able to achieve equilibrium levels. This is one of two macroeconomic time designations; the other is the short run. Long-run wage and price flexibility means that ALL markets, including resource markets and most notably labor markets, are in equilibrium, with neither surpluses nor shortages. Wage and price flexibility and the resulting resource market equilibria are the reason for the vertical long-run aggregate supply curve.

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    Today, you are likely to spend a great deal of time wandering around the shopping mall seeking to buy either storage boxes for your computer software CDs or a set of tires. Be on the lookout for small children selling products door-to-door.
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    The first paper currency used in North America was pasteboard playing cards "temporarily" authorized as money by the colonial governor of French Canada, awaiting "real money" from France.
    "Experience keeps a dear school, but fools will learn in no other. "

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