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ADJUSTMENT, SHORT-RUN AGGREGATE MARKET: Disequilibrium in the short-run aggregate market induces changes in the price level that restore equilibrium. If the price level is above the short-run equilibrium price level, economy-wide product market surpluses cause the price level to fall. If the price level is below the short-run equilibrium price level, economy-wide product market shortages cause the price level to rise. In both cases short-run equilibrium is restored. You might want to compare adjustment, long-run aggregate market. Price level changes induce changes in both aggregate expenditures and real production. Unlike the long-run aggregate market, changes in the price level can induce changes in short-run aggregate supply, making it greater or less than full-employment real production.
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COLLUSION PRODUCTION ANALYSIS To avoid competition, oligopolistic firms are occasionally inclined to cooperate through collusion. Collusion occurs when two or more oligopolistic firms jointly agree to control market prices and quantity and to generally act like a monopoly. Colluding firms set a price and produce a quantity that maximizes industry-wide economic profit, the same price and quantity that would be selected by a profit-maximizing monopoly. Once the industry-wide price and production are determined, each individual firm produces the quantity of output that equates the marginal cost of the firm to the marginal revenue for the industry.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius looking to buy either a wall poster commemorating the 2000 Presidential election or a rechargeable flashlight. Be on the lookout for malfunctioning pocket calculators.
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This isn't me! What am I?
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Okun's Law posits that the unemployment rate increases by 1% for every 2% gap between real GDP and full-employment real GDP.
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"There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment, and you start to decline. " -- Andy Grove, Intel Corp. chairman
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MSCI
Morgan Stanley Capital Index
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