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PERFECT COMPETITION, TOTAL ANALYSIS: A perfectly competitive firm produces the profit-maximizing quantity of output that generates the greatest difference between total revenue and total cost. This total approach is one of three methods that used to determine the profit-maximizing quantity of output. The other two methods involve the direct analysis of economic profit or a comparison of marginal revenue and marginal cost.
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Lesson 8: Market Shocks | Unit 4: Double Shifts
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Page: 16 of 20
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Topic:
Less Demand and More Supply
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Here we have demand decreasing (tastes change) and supply increasing (technological breakthrough).- A decrease in demand causes a decrease in both price and quantity.
- An increase supply causes price to decrease and quantity to increase.
- The combined effect is an obvious decrease in price but a questionable change in quantity.
- At the new equilibrium the quantity is indeterminant.
- If demand and supply curve shift in opposite directions, then quantity is indeterminant, but price is known.
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AGGREGATE SUPPLY DECREASE, LONG-RUN AGGREGATE MARKET A shock to the long-run aggregate market caused by a decrease in aggregate supply, resulting in and illustrated by a leftward shift of the long-run aggregate supply curve. A decrease in aggregate supply in the long-run aggregate market results in an increase in the price level and a decrease in real production. The level of real production resulting from the shock is a smaller level of full-employment real production.
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WHITE GULLIBON
[What's This?]
Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club wanting to buy either a birthday gift for your father that doesn't look like every other birthday gift for your father or a green fountain pen. Be on the lookout for vindictive digital clocks with revenge on their minds.
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During the American Revolution, the price of corn rose 10,000 percent, the price of wheat 14,000 percent, the price of flour 15,000 percent, and the price of beef 33,000 percent.
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"The road to success is always under construction. " -- Lily Tomlin, Actress
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D-J
Dow Jones
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