Industry, where supply will fall. It should be noted that supply is planned supply, not necessarily

what is actually sold. The latter depends on equilibrium in the market.

The conditions of supply constitute but one aspect of the determination of the economic situation.

A market equilibrium is no less important. It is a situation in which the actions of all economic

agents are mutually consistent. It is a concept meaningfully applied to any variable whose

level is determined by the outcome of the operation of at least one mechanism or process acting on

countervailing forces. For example, equilibrium price is affected by a process which drives suppliers

to increase prices when demand is in excess and to undercut each other when supply is in

excess — the mechanism thus regulates the forces of supply and demand.

It is possible for a short-run equilibrium to exist, when some quickly adjusting processes are in

balance, while other longer-term forces are still causing change to occur. For example, in perfect

competition, in the short run firms’ profit-maximizing behaviour can lead to a market equilibrium

with price equal to marginal cost; yet if abnormal profits exist at that price, new firms might enter

the industry — a process quite separate from the price-setting behaviour of those already in it —

that will change the long-term equilibrium price.

A distinction can be drawn between a static equilibrium, when the value of the relevant variable is

unchanging, and a dynamic equilibrium, when the value of the variable is changing but in a regular

way. Equilibrium growth, for example, might manifest itself in a steady 2.25 per cent rise in GDP.

The concept of an equilibrium has developed in recent decades with the advance of game theory.

An equilibrium in a game is, loosely, a set of mutually compatible strategies such that given the

strategies of other players, each player will be content with their own strategy.

Certainly, equilibrium should not be confused with efficiency. Although the efficient level of a

Variable is sometimes likely to be an equilibrium, there is no guarantee that equilibria are efficient.

b) The second point is the trend determination of a situation development that allows to work out

the strategy of management of external economic activity and foreign trade activity.

c) The third one is the economic situation of the world market that takes into account the scale

and degree of business activity and the level of commercial risk.

By business activity we mean the business cycle as a well-observed economic phenomenon,

though it often occurs on a generally upward growth path and has a variable time span, typically of

the order of five years.

By commercial risk we mean a state in which the number of possible future events exceeds the

number of events that will actually occur, and some measure of probability can be attached to

them. This definition distinguishes risk from uncertainty, in which the probabilities are unknown.

A gambler, for example, faces risk because he could either be very much richer tomorrow than he is

today or (more likely) slightly poorer, depending on whether a roulette wheel spins the ball into the

right hole — and he knows the odds of the roulette wheel.