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During the recession of 2008,the U.S.experienced lower real interest rates at the same time investment and GDP were falling.How would a Classical economist explain this recession? Provide a graph of the Classical capital market to illustrate your arguments.
MR = MC
A condition where a firm's marginal revenue (MR) equals its marginal cost (MC), commonly used to determine the profit-maximizing level of output.
ATC
Stands for Average Total Cost, which is the cost per unit of output, calculated by dividing the total cost by the quantity produced.
Average Total Cost
The sum of all production costs divided by the quantity of output produced, synonymous with the cost per unit including all variable and fixed costs.
Long-run Equilibrium
A state in which all factors of production and costs are variable, and firms in the industry make just enough profit to stay in business.
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