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The Price Level Decreases and Output Increases in the Transition

question 29

Multiple Choice

The price level decreases and output increases in the transition from the short run to the long run when the short-run equilibrium is _____ the natural rate of output in the short run.


Definitions:

Marginal Costs

The hike in total financial outlay required for the fabrication of one additional unit of a product or service.

Variable Costs

Costs that change in proportion to the level of production or business activity, such as raw materials and direct labor expenses.

Average Total Cost

The total cost of production divided by the quantity of output produced.

Total Cost

The complete cost of production, including both fixed and variable costs, incurred by a firm in producing and selling a certain amount of a good or service.

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