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AGGREGATE MARKET EQUILIBRIUM: The state of equilibrium that exists in the aggregate market when real aggregate expenditures are equal to real production with no imbalances to induce changes in the price level or real production. In other words, the opposing forces of aggregate demand (the buyers) and aggregate supply (the sellers) exactly offset each other. The four macroeconomic sector (household, business, government, and foreign) buyers purchase all of the real production that they seek at the existing price level and business-sector producers sell all of the real production that they have at the existing price level. The aggregate market equilibrium actually comes in two forms: (1) long-run equilibrium, in which all three aggregated markets (product, financial, and resource) are in equilibrium and (2) short-run equilibrium, in which the product and financial markets are in equilibrium, but the resource markets are not.
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PERFECT COMPETITION, LONG-RUN ADJUSTMENT A perfectly competitive industry undertakes a two-part adjustment to equilibrium in the long run. One is the adjustment of each perfectly competitive 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 eliminate economic profit or economic loss. The end result of this long-run adjustment is a multi-faceted equilibrium condition that price is equal to marginal cost and average cost (both short run and long run).
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store looking to buy either a T-shirt commemorating the 2000 Presidential election or a really, really exciting, action-filled video game. Be on the lookout for pencil sharpeners with an attitude.
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The average length of a "business lunch" is about 36 minutes.
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"People of mediocre ability sometimes achieve outstanding success because they don't know when to quit. " -- George Allen, U.S. senator
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CME
Chicago Mercantile Exchange
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