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shifts in demand or supply curves (DO) An upward or downward movement of a whole demand or supply curve because a variable, other than price, has changed. A change in consumer tastes, in consumer incomes or in the prices of other goods can move a demand curve; a change in technology or governmental regulation can move a supply curve. These shifts are always the result of a failure of the CETERIS PARIBUS condition.<br /><em>See also:</em> identification problem
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equilibrium (DO, EO)<br />A state of balance such that a set of selected interrelated variables has no inherent tendency to change. In economics, a major example is the balance of the forces equating demand and supply. sMITH in his discussion of prices used the idea of market prices fluctuating around the NATURAL PRICE which can be considered a central price. The SUBSISTENCE THEORY OF WAGES regarded expansions and contractions of a population as equilibrating forces making the subsistence wage rate the long-run equilibrium wage. An equilibrium can exist for an economy as a whole, for a sector of it, for a particular market or for an institution, such as a firm. Although the term is applied principally to static models, there can be an equilibrium in dynamic models when variables proceed along an equilibrium-type path. Equilibria can be stable or unstable, temporary or permanent: some of them do not exist. The Marshallian and Keynesian cross-diagrams are the most famous diagrammatical representations of equilibrium (E, equilibrium). National income<br /><em>See also:</em> general equilibrium; temporary equilibrium<br /><em>Reference</em><br /> Amendola, M. and Gaffard, J.-L. (1998) Out of equilibrium, Oxford and New York: Clarendon Press.<br /> Caravale, G. (ed.) (1997) Equilibrium and economic theory, London and New York: Routledge.<br /> Fisher, F.M. (1983) Disequilibrium Foundations of Equilibrium Economics, Cambridge: Cambridge University Press.<br /> Samuelson, P.A. (1965) Foundations of Economic Analysis, 2nd edn, New York: Athenaeum.
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