Equilibrium Expenditure Occurs Where the Aggregate Expenditure Curve Crosses the

question 139

Multiple Choice

Equilibrium expenditure occurs where the aggregate expenditure curve crosses the

• A)45- degree line.
• B)vertical axis.
• C)horizontal axis.
• D)consumption function.

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Definitions:

Long-Run Cost

Costs that a firm incurs when all factors of production and costs are variable, not fixed, in the long term.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing as scale increases.

Diseconomies of Scale

The phenomenon where production costs increase as a firm expands output, leading to reduced efficiency.

U-Shaped Long-Run Average Cost Curve

This describes the phenomenon where, over time, average costs first decrease with increased production, hit a minimum, and then increase with further production increase, forming a U-shape.