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  2. Long run and short run - Wikipedia

    en.wikipedia.org/wiki/Long_run_and_short_run

    The transition from the short-run to the long-run may be done by considering some short-run equilibrium that is also a long-run equilibrium as to supply and demand, then comparing that state against a new short-run and long-run equilibrium state from a change that disturbs equilibrium, say in the sales-tax rate, tracing out the short-run ...

  3. Perfect competition - Wikipedia

    en.wikipedia.org/wiki/Perfect_competition

    Only in the short run can a firm in a perfectly competitive market make an economic profit. Economic profit does not occur in perfect competition in long run equilibrium; if it did, there would be an incentive for new firms to enter the industry, aided by a lack of barriers to entry until there was no longer any economic profit. [11]

  4. Error correction model - Wikipedia

    en.wikipedia.org/wiki/Error_correction_model

    The first term in the RHS describes short-run impact of change in on , the second term explains long-run gravitation towards the equilibrium relationship between the variables, and the third term reflects random shocks that the system receives (e.g. shocks of consumer confidence that affect consumption). To see how the model works, consider two ...

  5. DAD–SAS model - Wikipedia

    en.wikipedia.org/wiki/DAD–SAS_model

    The DAD (Dynamic aggregate demand) curve is in the long run a horizontal line called the EAD (Equilibrium aggregate Demand) curve. The short run DAD curve at flexible exchange rates is given by the equation:

  6. IS–LM model - Wikipedia

    en.wikipedia.org/wiki/IS–LM_model

    The IS–LM model shows the relationship between interest rates and output in the short run in a closed economy. The intersection of the "investment–saving" (IS) and "liquidity preference–money supply" (LM) curves illustrates a "general equilibrium" where supposed simultaneous equilibria occur in both the goods and the money markets.

  7. Economic equilibrium - Wikipedia

    en.wikipedia.org/wiki/Economic_equilibrium

    In economics, economic equilibrium is a situation in which the economic forces of supply and demand are balanced, meaning that economic variables will no longer change. [ 1 ] Market equilibrium in this case is a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal ...

  8. Temporary equilibrium method - Wikipedia

    en.wikipedia.org/wiki/Temporary_equilibrium_method

    The overall system involves two state variables: price and capacity. Using the temporary equilibrium method, it can be reduced to a system involving only state variable. This is possible because each short-run equilibrium price will be a function of the prevailing capacity, and the change of capacity will be determined by the prevailing price.

  9. Supply shock - Wikipedia

    en.wikipedia.org/wiki/Supply_shock

    In the short run, an economy-wide negative supply shock will shift the aggregate supply curve leftward, decreasing the output and increasing the price level. [1] For example, the imposition of an embargo on trade in oil would cause an adverse supply shock, since oil is a key factor of production for a wide variety of goods.