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CHANGE IN BUSINESS INVENTORIES: The increase or decrease in the stocks of final goods, intermediate goods, raw materials, and other inputs that businesses keep on hand to use in production. This is one of two main categories of gross private domestic investment included in the National Income and Product Accounts maintained by the Bureau of Economic Analysis. The other category is fixed investment. Change in business inventories is NOT what most people think of when the topic of business investment arises. Inventory changes are considered investment because firms need inventories to smooth the flow of production and sales just like they need factories and equipment to produce goods. In fact, inventories are frequently termed "working capital."
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SUBSTITUTION EFFECT The change in quantity demanded that results because a change in the demand price of a good causes a change in the relative prices, which induces buyers to substitute the purchase of one good for another. This is one of two reasons, or effects, underlying the law of demand and the negative slope of the market demand curve. The other is the income effect.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time driving to a factory outlet wanting to buy either a turbo-powered vacuum cleaner or a battery-powered, rechargeable vacuum cleaner. Be on the lookout for cardboard boxes.
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This isn't me! What am I?
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Al Capone's business card said he was a used furniture dealer.
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"The majority of men meet with failure because of their lack of persistence in creating new plans to take the place of those that fail. " -- Napoleon Hill, author
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SPO
Strongly Pareto Optimal
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