-In the Above Figure, the Short- Run Aggregate Supply Curve

question 108

Multiple Choice

-In the above figure, the short- run aggregate supply curve is SAS₁. If the prices of resources fall, there is

• A)a shift to SAS₀.
• B)a shift to SAS₂.
• C)an upward movement along SAS₁.
• D)a downward movement along SAS₁.

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Definitions:

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price-takers.

Marginal Revenue Product

The extra revenue generated from employing one additional unit of a resource.

Marginal Cost

The additional cost incurred by producing one more unit of a product, which can vary depending on the level of production.

Pareto Efficient

A distribution of resources where improving the situation of one person cannot be achieved without detriment to another.