Consider the Basic AD/AS Model

question 71

Multiple Choice

Consider the basic AD/AS model.If their unit costs rise as output increases,price-taking firms will be prepared to produce ________ only if ________.

• A)more; prices decrease
• B)more; the economy is in equilibrium
• C)their current output; prices increase
• D)less; prices increase
• E)more; prices increase

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Definitions:

Purchase Discounts

A reduction in the price paid for goods or services, often granted by the seller as an incentive for early payment.

Freight-In

Freight-in concerns the shipping costs of receiving goods to be sold or used in production, added to the cost of purchased inventory.

Sales Returns and Allowances

Concessions made by the seller, including refunds and reductions in the original selling price for returned goods or deficiencies.

Operating Expenses

Expenses incurred from a company's primary business activities, excluding cost of goods sold, such as rent, salaries, and utility bills.