Because the Aggregate Price Level Has No Effect on Aggregate

question 80

Multiple Choice

Because the aggregate price level has no effect on aggregate output in the long run, the long-run aggregate supply curve is:

• A) upward sloping.
• B) vertical.
• C) horizontal.
• D) downward sloping.

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Definitions:

Perfect Competition

A market structure characterized by a large number of buyers and sellers, homogenous products, and the free entry and exit of firms, leading to price-taking behavior.

Market Price

The price at which a good or service is bought and sold in a marketplace, determined by the forces of supply and demand.

Perfect Competitors

Firms operating in a market where there are many sellers and buyers, products are homogenous, and there is free entry and exit from the market.

Short Run

A period in economics during which at least one input (like factory size) is fixed and cannot be changed, contrasting with the long run where all inputs can be varied.