Overview
Long run economic adjustment is a crucial concept in economics that describes how economies adapt to changes over time. It involves the reallocation of resources, shifts in production, and changes in consumption patterns as markets strive to reach a new equilibrium after disturbances. Understanding ...
Key Terms
Example: The market reaches equilibrium when the quantity of goods supplied matches the quantity demanded.
Example: An increase in supply can lead to lower prices if demand remains constant.
Example: High demand for electric cars has led to increased production by manufacturers.
Example: After a price increase, consumers may buy less, leading to a market adjustment.
Example: Economic growth can be measured by the rise in GDP.
Example: In the long run, firms can enter or exit the market freely.