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LONG-RUN EQUILIBRIUM, MONOPOLISTIC COMPETITION: Relative freedom of entry and exit ensures that, in the long run, every firm in a monopolistically competitive industry earns exactly a normal profit, receiving neither an economic profit, nor incurring an economic loss. This result is achieved because entry and exit affects the market supply curve, which affects the overall market price, each firm's demand curve, and the range or prices it can charge. Each firm's demand curve adjusts until the profit-maximizing price is exactly equal to average total cost (both short run and long run).
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CHANGE IN AGGREGATE SUPPLY A shift of the short-run or long-run aggregate supply curve caused by a change in one of the aggregate supply determinants. In essence, a change in aggregate supply is caused by any factor affecting supply EXCEPT the price level. This is one of two changes related to aggregate supply. The other is a change in real production. A change in aggregate supply is comparable to a change in market supply.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time going from convenience store to convenience store hoping to buy either rechargeable batteries or a rechargeable battery for your computer. Be on the lookout for strangers with large satchels of used undergarments.
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This isn't me! What am I?
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Francis Bacon (1561-1626), a champion of the scientific method, died when he caught a severe cold while attempting to preserve a chicken by filling it with snow.
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"In the business world, everyone is paid in two coins: cash and experience. Take the experience first; the cash will come later. " -- Harold S. Green, MCI founder
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PV
Present Value
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