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LONG-RUN ADJUSTMENT: The combined adjustment of an industry and of each firm in the industry to an equilibrium condition that based on (1) profit maximization when all inputs are variable and (2) the entry and exit of firms. The complete adjustment is undertaken by both perfect competition and monopolistic competition. There are two parts of this adjustment process. One is the adjustment of each firm to the appropriate factory size that maximizes long-run profit. The other is the entry of firms into the industry or exit of firms out of the industry, to eliminated economic profits or economic losses. The end result of this long-run adjustment is different for the two market structures based on the fact that perfect competition has equality between price and marginal revenue, while monopolistic competition does not.
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FALLACY OF DIVISION The logical fallacy of arguing that what is true for the whole is also true for the parts. In the study of economics, this takes the form of assuming that what works for the aggregate, or macroeconomy, also works for parts of the economy, such as households or businesses. The contrasting fallacy is the fallacy of composition.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time flipping through mail order catalogs looking to buy either income tax software or a how-to book on the art of negotiation. Be on the lookout for fairy dust that tastes like salt.
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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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"I learned about the strength you can get from a close family life. I learned to keep going, even in bad times. I learned not to despair, even when my world was falling apart. I learned that there are no free lunches. And I learned the value of hard work. " -- Lee Iacocca
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MSE
Mean Square Error
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