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LAW OF DIMINISHING MARGINAL RETURNS: A principle stating that as more and more of a variable input is combined with a fixed input in short-run production, the marginal product of the variable input eventually declines. This is THE economic principle underlying the analysis of short-run production for a firm. Among a host of other things, it offers an explanation for the upward-sloping market supply curve. How does the law of diminishing marginal returns help us understand supply? The law of supply and the upward-sloping supply curve indicate that a firm needs to receive higher prices to produce and sell larger quantities. Why do they need higher prices?
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Lesson 7: Market | Unit 3: A Graph
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Page: 10 of 22
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Combining the demand and supply curves into a single graph gives us a market graph.- Price is measured on the vertical axis and quantity on the horizontal axis.
- The negative slope indicates the law of demand.
- The law of supply is indicated by the positive slope of this curve.
- We now have a market
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MARKET ADJUSTMENT The economic analysis of changes in market equilibrium caused by changes in any of the five demand determinants and/or the five supply determinants. Market adjustment comes in one of eight varieties, given that the two curves comprising the market (demand curve and supply curve) can either increase or decrease, individually or simultaneously. Four adjustments involve a shift of EITHER the demand curve OR the supply curve. The other four adjustments involve shifts of BOTH the demand curve AND the supply curve.
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Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
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"If anything terrifies me, I must try to conquer it. " -- Francis Charles Chichester, yachtsman, aviator
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NBS
Nash Bargaining Solution
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