Refer to the Figure Below

question 38

Multiple Choice

Refer to the figure below. Based on the figure, if the economy is in short-run equilibrium with output equal to 16,000, then there is ______, and ______ could return the economy to potential output (Y*) .

• A)an expansionary gap; a decrease in autonomous expenditures of 1,000
• B)an expansionary gap; a decrease in autonomous expenditures of 4,000
• C)a recessionary gap; an increase in autonomous expenditures of 1,000
• D)a recessionary gap; an increase in autonomous expenditures of 4,000

Learn the principles of fixed costs and how they remain constant regardless of changes in production or sales volume.

Identify and distinguish between various types of costs such as sunk costs, period costs, product costs, and opportunity costs.

Calculate total costs, including both variable and fixed components, at different levels of production or sales volume.

Understand how costs behave within the relevant range and how to apply this understanding to cost management.

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Definitions:

Partnership Agreement

A written agreement between business partners outlining the rules and responsibilities within the partnership.

Sole Proprietorship

A business structure where a single individual owns, manages, and is responsible for all aspects of the business.

State

A political entity characterized by a defined territory, population, and government with sovereignty over its domestic and international affairs.

Sole Proprietorships

A form of business entity owned and run by one individual where there is no distinction between the owner and the business.