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:

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, resulting in net profit or loss.

Unrealized Loss

A loss that results from holding onto an asset that has decreased in price, not realized until the asset is sold for a lower price.

Outstanding Voting Shares

The number of shares that are currently held by shareholders that grant them the right to vote on company matters.

Cash Dividend

Cash distributed by a business to its owners from the earnings it has generated.