Refer to the Figure Given Below

question 54

Multiple Choice

Refer to the figure given below. In the above figure, AD₁ and AS₁ represent the original aggregate demand and aggregate supply curves, respectively.AD₂ and AS₂ show the new aggregate demand and aggregate supply curves.At the original equilibrium price and quantity, this economy is experiencing:

• A)inflation.
• B)economic growth.
• C)full employment.
• D)less than full-capacity output.

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Definitions:

P = MC

An economic condition where price equals marginal cost, indicating optimal resource allocation in perfectly competitive markets.

Optimally Allocated

Refers to the distribution of resources in a manner that maximizes efficiency and effectiveness, often resulting in the best possible outcome.

Short-Run Supply

The total quantity of goods and services that producers are willing and able to sell at current prices in a short-term period, often influenced by fixed production capacities.

Long-Run Supply

The total amount of a product or service that is available to the market from all producers over a long period, when all inputs can be adjusted.