-Suppose the Cost Curves in the Above Figure Apply to All

question 121

Multiple Choice

-Suppose the cost curves in the above figure apply to all firms in the market. Then, if the initial price is P1, in the long run the market

• A) supply will increase.
• B) supply will decrease.
• C) demand will increase.
• D) demand will decrease.

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Definitions:

Inflation Rate

The inflation rate is the percentage increase in the general level of prices for goods and services over a period of time.

Money Supply Growth Rate

The rate at which the total amount of money in circulation or in existence in a country grows.

Short-Run Phillips Curve

A graphical representation showing the inverse relationship between inflation and unemployment rates in the short term.

Shift Right

In economics, this refers to an increase in supply or demand in a market model, leading to a new equilibrium.