The Economy's Potential Output Corresponds to the Level of

question 124

Multiple Choice

The economy's potential output corresponds to the level of

• A) natural employment.
• B) frictional unemployment.
• C) structural unemployment.
• D) cyclical unemployment.

---

Definitions:

Variable Cost

Costs that vary directly with the level of production or with volume of output.

Inelastic Demand

A market situation where the demand for a product does not significantly change with a change in its price.

Elastic Demand

A situation in which the demand for a product is sensitive to price changes, meaning that a small change in price results in a large change in the quantity demanded.

Fixed Cost

Costs that do not vary with the level of production or sales activities, such as rent or salaries.