In Addition to the Regular Monthly Payment of a Percentage

question 15

Multiple Choice

In addition to the regular monthly payment of a percentage of gross sales to her franchisor,Wilma is required to submit a smaller percentage for advertising costs.She is willing to do this because:

• A)otherwise she cannot operate her franchise.
• B)she receives a discount on the cost of her inventory.
• C)Wilma's budget is too small for her advertising to be effective.
• D)the franchisor promotes the business both locally and nationally,reinforcing the brand name.

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Definitions:

Actual Price Level

The current general price of goods and services in the economy, not adjusted for inflation.

Short-Run Aggregate Supply

The overall quantity of products and services that companies intend to offer for sale within a brief period, based on existing prices.

Aggregate Demand

Overall market demand for goods and services in an economy, determined at a prevailing comprehensive price level for a certain duration.

Equilibrium Output

The level of output where the quantity of goods produced equals the quantity of goods consumed, resulting in market equilibrium.