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PERFECT COMPETITION AND SHORT-RUN SUPPLY CURVE: A perfectly competitive firm's supply curve is that portion of its' marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. As such, the firm moves along it's marginal cost curve in response to alternative prices. Because the marginal cost curve is positively sloped due to the law of diminishing marginal returns, the firm's supply curve is also positively sloped.
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Lesson 14: Aggregate Supply | Unit 2: Two Options
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Page: 7 of 20
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- The differences between the long run and the short run aggregate supply, in terms of price flexibility and full employment.
- How the long run is achieved when all prices are flexible, giving us full employment and equilibria in the product, financial, and resource markets.
- How aggregate supply reacts in the long run to more or less demand for aggregate production to maintain full employment at alternative price levels.
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WHOLESALE PRICE INDEX An index of the prices paid by retail stores for the products they ultimately resell to consumers. The Wholesale Price Index (WPI) was the forerunner of the modern Producer Price Index (PPI) and was discontinued in 1978. Other noted price indexes used to track economic activity are the Consumer Price Index (CPI) and the GDP price deflator.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time at a going out of business sale wanting to buy either 500 feet of telephone cable or a package of 4 by 6 index cards, the ones with lines. Be on the lookout for jovial bank tellers.
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This isn't me! What am I?
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Al Capone's business card said he was a used furniture dealer.
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"Recipe for success. Study while others are sleeping; work while others are loafing, prepare while others are playing, and dream while others are wishing." -- William A. Ward
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