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AGGREGATE MARKET: An economic model relating the price level and real production that is used to analyze business cycles, gross domestic product, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The aggregate market, inspired by the standard market model, captures the interaction between aggregate demand (the buyers) and short-run and long-run aggregate supply (the sellers).
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Lesson 6: Supply | Unit 4: Determinants
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Page: 16 of 19
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Topic:
Ch...Ch...Changes
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- Supply, the whole range of prices and quantities
- Quantity supplied, a specific quantity supplied at a specific price.
The difference between:- Change in supply, we are changing, moving, shifting, the entire supply curve, the whole set of prices and quantities is changing. The five determinants change the supply.
- Change in quantity supplied, we have moved to a new quantity on an same supply curve. Only the price of the good changes the quantity supplied.
- This difference lets us analyze cause and effect.
- Don't confuse these two.
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INFLEXIBLE 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, inflexible prices (also termed rigid prices or sticky prices) are a key reason underlying the positive slope of the short-run aggregate supply curve. Prices tend to be the most inflexible in resource markets, especially labor markets, and the least inflexible in financial markets, with product markets falling between the two.
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Al Capone's business card said he was a used furniture dealer.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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L/I
Letter of Intent
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