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Questions tagged [long-run]

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2
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0answers
40 views

Finding long run equilibrium price, quantity and number of firms with a linear average cost function

I've been been brushing up on my micoreocnomics lately and I came across a question in Perloff that looked really simple, but for some reason I am struggling to answer: Assume we are in the long run ...
0
votes
0answers
12 views

Positive Phillips Curve

I am doing some research for a class project for Phillips curve of countries. For a certain country that I am doing, I am getting a slope for the Phillips curve to be positive. Is this possible? ...
3
votes
1answer
159 views

Accelerator and Multiplier effects at full employment

I have a question regarding the multiplier and accelerator effects. The way I see it, the value of the multiplier tends to be lower as the economy approaches full capacity. I would therefore expect ...
6
votes
4answers
1k views

Can the stock market grow faster than GDP indefinitely?

My understanding of conventional wisdom is that average long-term growth of advanced economies is expected to be significantly lower than the average long-term growth of the value of the largest firms ...
0
votes
1answer
46 views

How does the self-corecting mechanism put the economy back to long run equilibrium following a negative shock on the stick-wage SRAS?

According to some lecture notes, apparently it is possible for the economy to return to long run equilibrium if via the self-correcting mechanism if there is a temporary shock to the stick wage (...
0
votes
1answer
59 views

Why are the concepts of short-run and long-run equilibrium exclusive to aggregate supply and demand and macroeconomics?

Shouldn’t there also be a concept of short vs. long-run equilibrium in microeconomics? After all, short-run equilibrium describes the state of the economy when wages and prices are still adjusting and ...
0
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3answers
60 views

How to estimate long term exchange rate?

I'am looking for a book or paper that explain (in a theoretical and empirical way) how to estimate the long-run exchange rate for a country. Could someone suggest me one?
1
vote
1answer
600 views

Why is there a structural deficit/surplus?

I'm going through Fiscal Policy and I'm reading about Structural Budget and Cyclical Budget. To my understanding, Cyclical Budget is what occurs when automatic fiscal policy is in use. So G and T are ...
1
vote
0answers
40 views

Firms Entry/Exit Due to Economic Profit in a Perfectly Competitive Market

According to the textbooks,in a long run equilibrium, the market price will be equal to the minimum point of firm's ATC curve. But every firm's ATC curve will differ i.e each one of them will have ...
2
votes
1answer
4k views

Number of firms in Long Run

In a competitive market, is it possible to know the change (increase/decrease) in number of firms in the Long run with a positive shift in demand for increasing costs case?
3
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0answers
262 views

What are the relationships between price stability and long term economic growth?

I was wondering what the links are between price stability and economic growth on the long term.
1
vote
1answer
335 views

Is there any difference between using LRAC and LRATC in a long-run market structure diagram?

I am currently being taught to use average total cost (ATC) to label the U-shaped curve in the short-run on a market structure diagram, and long-run average cost (LRAC) for the equivalent curve in a ...
1
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0answers
1k views

Difference between short run and long run supply curves?

We know that in short run supply curve is horizontal which means that prices remain rigid while quantity of supply adjusts according to demand. However, in long run this reverses. I know about some ...
0
votes
1answer
697 views

Why do firm output decreases when fixed cost decreases in Long Run?

So in long run if fixed cost is lowered, more firms enter the industry and increase the supply, bringing up industrial output. According to the firm diagram, Average Cost lowered so that the firm ...
1
vote
0answers
446 views

Short Run vs Long Run Cost Functions

Let $z_a$ and $z_b$ are two vectors of inputs. $z_a$ is variable in both long run and short run however $z_b$ is only variable in long run. Now let's suppose that the price of one of the inputs in ...
2
votes
1answer
17k views

How do I calculate quantity to minimize long-run average total cost?

I have a formula for the long-run total cost curve, $$TC(Q) = 6000Q + 40Q^2 + Q^3$$ and I'm trying to find the quantity that minimizes the long-run average total cost. I assume I'm trying to find ...
3
votes
2answers
143 views

Will China's GDP be greater than the USA's and Europe's combined?

A newspaper said in 2080 China can be a developed country, with a bigger population. Does that mean China's GDP is going to be bigger than the USA's and Europe's combined? Also, is this possible even ...
6
votes
1answer
632 views

What is the advantage and disadvantage of fiscal illusion policy in terms for the financial market?

What is the advantage and disadvantage of fiscal illusion policy for the financial market? Fiscal illusion suggests that when government revenues are not completely transparent or are not fully ...
8
votes
1answer
280 views

A market correction for an industry which has had long-run negative externalities

Take a market where there have been long-run negative externalities. That is to say, the negative externalities have been in place long enough to have played a part in the investment decisions for all ...