Refer to the Information Provided in Figure 26

question 219

Multiple Choice

Refer to the information provided in Figure 26.7 below to answer the question(s) that follow. Figure 26.7
-Refer to Figure 26.7. The level of aggregate output that can be sustained in the long run without inflation

• A) is $800 million.
• B) is $700 million.
• C) is $400 million.
• D) cannot be determined from this information because aggregate demand is not given.

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Definitions:

Output

The total amount of goods or services produced by a company, industry, or economy over a certain period.

Constant Returns To Scale

Long-run average total cost is constant as output increases.

Long-Run Average Total Cost

The average cost per unit of output when all inputs, including those typically fixed, are variable and optimized.

Variable Cost

Costs that vary directly with the level of production or output, such as materials and labor, in contrast to fixed costs, which remain constant regardless of output levels.