Chapter 8 - Supply And Demand Flashcards
1
Q
Competitive Equilibrium
A
A market in which all buyers and sellers are price-takers, and at the prevailing market price, the quantity supplied is equal to the quantity demanded.
2
Q
Exogenous Shocks
A
Coming from outside the model rather than being produced by the workings of the model itself. Opposite to: Endogenous.
3
Q
Long-Run
A
A long-run cost curve refers to costs when the firm can fully adjust all of the inputs including its capital goods; but technology and the economy’s institutions are exogenous.
4
Q
Short-Run Equilibrium
A
An equilibrium that will prevail while certain market conditions remain constant, but where we expect these conditions to change as soon as people can respond to the situation. It assumes there is no entry or exit from the market.
