In the Short-Run an Increase in the Costs of Production

question 71

Multiple Choice

In the short-run an increase in the costs of production makes

• A)output and prices rise.
• B)output rise and prices fall.
• C)output fall and prices rise.
• D)output and prices fall.

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Definitions:

Collateral

An asset backing a loan. In the event of default the collateral becomes the property of the lender to satisfy the obligation. Also called security for the loan.

Public Warehouses

Warehousing facilities operated by third parties that offer storage and handling services to the public for a fee.

Trade Credit

A type of commercial financing in which a customer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Commercial Paper

A short-term, unsecured debt security that corporations issue, primarily to fund payroll, accounts payable, and inventory needs.