Suppose That the Slope of the AE Curve Is 0

question 21

Multiple Choice

Suppose that the slope of the AE curve is 0.67. Then a $100 increase in autonomous spending causes equilibrium expenditure to

• A) increase by $300.
• B) decrease by $200.
• C) decrease by $300.
• D) increase by $200.

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Definitions:

Division of Labor

The assignment of different parts of a manufacturing process or task to different people in order to improve efficiency.

Mass Production

The manufacture of large quantities of standardized products, often using assembly line or automation technologies.

Production Possibilities

The different quantities of goods and services an economy can produce when all its resources are fully and efficiently utilized.

Opportunity Cost

The expense incurred by not choosing the second-best option available during decision-making.