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LEADING ECONOMIC INDICATOR: One of eleven economic statistics that tend to move up or down a few months before the expansions and contractions of the business cycle. These leading indicators are -- manufacturers new orders, an index of vendor performance, orders for plant and equipment, Standard & Poor's 500 index of stock prices, new building permits, durable goods manufacturers unfilled orders, the money supply, change in materials prices, average workweek in manufacturing, changes in business and consumer credit, a consumer confidence index, and initial claims for unemployment insurance. Leading indicators indicate what the aggregate economy is likely to do, business-cycle-wise, 3 to 12 months down the road. When leading indicators rise today, then the rest of the economy is likely to rise in the coming year. And when leading indicators decline, then the economy is likely to decline in 3 to 12 months.
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                           SUPPLY TO A FIRM: The range of quantities of a factor that a firm is able to buy at a range of factor prices. Supply to a firm is a phrase that is most relevant to the study of factor markets, especially when contrasted with supply by a firm. Supply to a firm puts the firm on the buying side of the factor market. Supply by a firm puts the firm on the selling side of the factor market. The distinction between "supply to a firm" and "supply by a firm" is most important for produced factors of production, especially the vast array of capital goods. The importance comes from the possible confusion over which side of the factor market a firm is on. This confusion results as much as anything from the notion that firms are typically on the supply-side of the product markets and the demand-side of factor markets. However, firms also appear on the supply-side of factor markets.To illustrate this notion of "supply to a firm," consider the production of Quadra 9000 computers by the innovative folks at Quadra DG Computer Works. Standard operating procedure for Quadra DG Computer Works is to produce Quadra 9000 computers according to the standard principles of production and cost (law of diminishing marginal returns, profit-maximization, etc.). It then supplies these computers to consumers, like Duncan Thurly, residing in households all over the economy, through product markets (stores, mail order, etc.). Quadra DG Computer Works does the supplying of Quadra 9000 computers and the relevant phrase is "supply by a firm." The phrase "supply by a firm" is also relevant if Quadra DG Computer Works supplies Quadra 9000 computers as capital goods rather than consumer goods. When Quadra 9000 computers are used as capital goods and they are considered a factor of production. For example, Quadra 9000 computers are an important productive factor for cellular telephone communication services offered by Digital Distance Wireless Telecommunications. The phrase "supply to a firm," however, is relevant from the other side of this computer market. From the viewpoint of Digital Distance Wireless Telecommunications, computers are being supplied TO, not FROM. They are the buyers in this factor market. This supply to a firm involves the "supply" of Quadra 9000 computers, with the "to a firm" being Digital Distance Wireless Telecommunications. The distinction between "supply to a firm" and "supply by a firm" is particularly important in terms of market control. For a perfectly competitive buyer, "supply to a firm" is a perfectly elastic, horizontal supply curve. For a monopsony, in which the buyer has complete control over the buying-side of the market, then the supply to a firm is the overall market supply which is typically a positively-sloped curve. For imperfectly competitive firms, including oligopsony and monopsonistic competition, supply to a firm is corresponding portions of the overall market supply. By way of comparison, for a perfectly competitive seller, the supply by a firm, that is the firm's supply curve, is the firm's marginal cost curve above average variable cost. For a monopoly, in which the seller has complete control over the selling-side of the market, then the supply by a firm is whatever the monopoly supplies, which may or may not follow a standard positively-sloped supply curve. For imperfectly competitive firms, including oligopoly and monopolistic competition, supply by a firm is corresponding portions of the overall market supply controlled by each firm.
Recommended Citation:SUPPLY TO A FIRM, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: April 26, 2024].
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YELLOW CHIPPEROON
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Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club seeking to buy either a package of blank rewritable CDs or yellow cotton balls. Be on the lookout for poorly written technical manuals.
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There were no banks in colonial America before the U.S. Revolutionary War. Anyone seeking a loan did so from another individual.
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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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