In the Very Long-Run AD-AS Model, If the AD-Curve Shifts

question 39

Multiple Choice

In the very long-run AD-AS model, if the AD-curve shifts to the left, then

• A)prices and output will both decrease
• B)prices and output will both increase
• C)prices will decrease but output will remain the same
• D)output will decrease but prices will remain the same
• E)output will increase but prices will decrease

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Definitions:

Total Cost

The total expense of manufacturing, encompassing both constant and fluctuating costs.

Marginal Cost

The financial impact of producing an additional unit of a product or service.

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Total Variable Cost

Total Variable Cost is the sum of all costs that vary with the level of production or output, including materials, labor, and other expenses that change in proportion to activity.