Consider the Basic AD/AS Model

question 20

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

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Definitions:

Fair Value Increments

Adjustments made to the book value of assets and liabilities to reflect their current market value during acquisition accounting.

Depreciable Assets

Assets whose cost is allocated over their useful lives through depreciation, typically tangible assets like machinery, buildings, and equipment.

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life.

Amortization Expense

The method of incrementally expensing the original value of an intangible asset throughout its period of utility.