The Long-Run Aggregate Supply Curve Is Vertical Because

question 19

Multiple Choice

The long-run aggregate supply curve is vertical because

• A) in the short run, prices are flexible but output is equal to potential output.
• B) in the long run, prices are flexible but output is equal to potential output.
• C) in the short run, prices are fixed but output may be above, below, or equal to potential output.
• D) in the long run, prices are fixed and output is equal to potential output.

Understand the difference between variable and fixed manufacturing overhead costs and their implications on overhead rates.

Calculate and understand the significance of plantwide predetermined overhead rates.

Apply overhead costs to jobs based on predetermined overhead rates.

Evaluate the efficiency of using labor-hours vs. machine-hours as allocation bases for overhead rates.