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RIGID PRICES: The proposition that some prices adjust slowly in response to market shortages or surpluses. This condition is most important for macroeconomic activity in the short run and short-run aggregate market analysis. In particular, rigid (also termed inflexible or sticky) prices are a key reason underlying the positive slope of the short-run aggregate supply curve. Prices tend to be the most rigid in resource markets, especially labor markets, and the least rigid in financial markets, with product markets falling somewhere in between.
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Lesson 6: Supply | Unit 4: Determinants
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Page: 15 of 19
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The five determinants that cause the supply curve to shift are:- Resource prices: If the price of any resource (labor, capital, land, or entrepreneurship) changes, so too does production cost and the ability to supply a good.
- Technology: Improving production techniques enhance the ability to supply a good.
- Prices of other goods: Goods using the same inputs can be either substitutes or complements in production.
- Expectations: Sellers' current supply depends on expectations of future prices.
- Number of sellers: More sellers, more supply. Fewer sellers, less supply.
These categories include all factors other than price that affect supply.
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ECONOMICS OF UNCERTAINTY The study of the role that uncertainty plays in the economy and in the allocation of resources, with special attention paid to the analysis of risk. Key topics in this area of study and analysis are risk preferences (aversion, neutrality, and loving) and the provision of insurance. This study of the economics of uncertainty is part of the broader study of the economics of information.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time at an auction wanting to buy either a remote controlled ceiling fan or a how-to book on home decorating. Be on the lookout for slow moving vehicles with darkened windows.
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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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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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AEA
American Economic Association
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