|
LONG-RUN AVERAGE COST CURVE: A curve depicting the per unit cost of producing a good or service in the long run when all inputs are variable. The long-run average cost curve (usually abbreviated LRAC) can be derived in two ways. On is to plot long-run average cost, which is, long-run total cost divided by the quantity of output produced. at different output levels. The more common method, however, is as an envelope of an infinite number of short-run average total cost curves. Such an envelope is base on identifying the point on each short-run average total cost curve that provides the lowest possible average cost for each quantity of output. The long-run average cost curve is U-shaped, reflecting economies of scale (or increasing returns to scale) when negatively-sloped and diseconomies of scale (or decreasing returns to scale) when positively sloped. The minimum point (or range) on the LRAC curve is the minimum efficient scale.
Visit the GLOSS*arama
|
|

|
|
Lesson 16: Aggregate Shocks | Unit 4: Complex Shifts
|
Page: 16 of 21
|
Shifts of the SRAS curve that move the aggregate market away of the long-run equilibrium also trigger the self-correcting mechanism that moves it back.- The initial shift of the SRAS curve is caused by any of the ceteris paribus determinants.
- The self-correcting shift of the SRAS curve is caused by wage changes triggered by an imbalance in the labor market.
Once again, we have two alternatives: - Short run aggregate supply increases.
- Short run aggregate supply decreases.
|
|
|
|
|
|
PRICE ELASTICITY OF SUPPLY The relative response of a change in quantity supplied to a change in price. More specifically the price elasticity of supply is the percentage change in quantity supplied due to a percentage change in price. This notion of elasticity captures the supply side of the market. A comparable elasticity on the demand side is the price elasticity of demand. Other notable supply elasticities are income elasticity of demand and cross elasticity of demand.
Complete Entry | Visit the WEB*pedia |


|
|
YELLOW CHIPPEROON [What's This?]
Today, you are likely to spend a great deal of time browsing through a long list of dot com websites hoping to buy either looseleaf notebook paper or a three-hole paper punch. Be on the lookout for neighborhood pets, especially belligerent parrots. Your Complete Scope
This isn't me! What am I?
|
|
The word "fiscal" is derived from a Latin word meaning "moneybag."
|
|
"If anything terrifies me, I must try to conquer it. " -- Francis Charles Chichester, yachtsman, aviator
|
|
WE Walrasian Equilibrium
|
|
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.
User Feedback
|

|