Refer to the Above Diagrams, One Can Conclude That If

question 57

Multiple Choice

Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company:

• A)will never have to adjust the optimal output and employment levels accordingly.
• B)has to adjust the employment level but not the optimal output.
• C)has to adjust the optimal output level but not the employment.
• D)has to adjust both optimal output level and employment accordingly.

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Definitions:

Production

The process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (the output).

Supply Curves

Graphical representations showing the relationship between the price of a good and the quantity of that good that suppliers are willing and able to sell, holding other factors constant.

Long Run

A period in economics in which all factors of production and costs are variable, allowing all inputs to be adjusted.

Perfectly Inelastic

A situation where demand does not change at all in response to changes in price.