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INDUCED: The general notion that changes in one variable are related to, or caused by, changes in another variable. Induced relations, especially changes in consumption expenditures are induced by changes in disposable income, are a key aspect of Keynesian economics and the multiplier effect. The alternative to an induced relation between variables is an autonomous relation, in which one variable is not related to another.
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Lesson 7: Market | Unit 1: The Exchange
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Page: 2 of 22
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Equilibrium is the balance of opposing forces that remains unchanged until another force intervenes. For example: If two people are pushing in opposite ways on a swinging door with equal strength, then neither will be able to go through. Each pusher represents an opposing force. For a market, the opposing forces are: - Demand. Buyers want to pay a lower price.
- Supply. Sellers want to receive a higher price.
Market equilibrium is indicated by equilibrium quantity and equilibrium price.- Equilibrium quantity is the quantity of a good traded among buyers and sellers when a market is in equilibrium.
- Equilibrium price is the price agreed to by buyers and sellers when a market is in equilibrium.
- Buyers and sellers will continue to trade the equilibrium quantity at the equilibrium price indefinitely.
- But, the equilibrium quantity and price can be disrupted by ceteris paribus determinants of demand and supply. Analyzing these disruptions help us understand economic events.
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PERFECT COMPETITION, LONG-RUN PRODUCTION ANALYSIS In the long run, a perfectly competitive firm adjusts plant size, or the quantity of capital, to maximize long-run profit. In addition, the entry and exit of firms into and out of a perfectly competitive market guarantees that each perfectly competitive firm earns nothing more or less than a normal profit. As a perfectly competitive industry reacts to changes in demand, it traces out positive, negative, or horizontal long-run supply curve due to increasing, decreasing, or constant cost.
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BLACK DISMALAPOD [What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius wanting to buy either a battery-powered, rechargeable vacuum cleaner or a remote controlled World War I bi-plane. Be on the lookout for telephone calls from long-lost relatives. Your Complete Scope
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A half gallon milk jug holds about $50 in pennies.
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"The best way to cheer yourself up is to try to cheer somebody else up." -- Mark Twain
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WTO World Trade Organization
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