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LAW OF DIMINISHING MARGINAL RETURNS: A principle stating that as more and more of a variable input is combined with a fixed input in short-run production, the marginal product of the variable input eventually declines. This is THE economic principle underlying the analysis of short-run production for a firm. Among a host of other things, it offers an explanation for the upward-sloping market supply curve. How does the law of diminishing marginal returns help us understand supply? The law of supply and the upward-sloping supply curve indicate that a firm needs to receive higher prices to produce and sell larger quantities. Why do they need higher prices?
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AGGREGATE DEMAND The total real expenditures on final goods and services produced in the domestic economy that buyers are willing and able to undertake at different price levels, during a given time period (usually a year). Aggregate demand, usually abbreviated AD, is an inverse relation between price level and aggregate expenditures. This is one half of the AS-AD (aggregate market) analysis. The other half is aggregate supply. Aggregate demand consists of four aggregate expenditures--consumption expenditures, investment expenditures, government purchases, and net exports--made by the four macroeconomic sectors--household, business, government, and foreign.
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BLUE PLACIDOLA
[What's This?]
Today, you are likely to spend a great deal of time wandering around the shopping mall seeking to buy either a pair of handcrafted oven mitts or a coffee table shaped like the state of Florida. Be on the lookout for gnomes hiding in cypress trees.
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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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"Leadership is the art of getting someone else to do something you want done because he wants to do it." -- Dwight Eisenhower, 34th US president
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FTC
Federal Trade Commission
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