An Example of a Negative Supply Shock Is ________

question 91

Multiple Choice

An example of a negative supply shock is ________.

• A) carbon cap-and-trade program
• B) a rapid increase in energy costs
• C) a fall in the price of oil
• D) the shale gas revolution

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Definitions:

Marginal Cost

Marginal cost is the change in total production cost that arises when the quantity produced is incremented by one unit.

Variable Inputs

Inputs in production that can be adjusted based on the production volume, including labor hours and raw materials, distinguishing them from inputs that remain constant.

Labor

The effort involving both bodily and intellectual activities applied in generating goods and services.

AVC

Average Variable Cost, the total variable cost divided by the quantity of output produced.