Exhibit: Short Run to Long Run Based on the Graph

question 20

Multiple Choice

Exhibit: Short Run to Long Run Based on the graph, if the economy starts from a short-term equilibrium at D, then the long-run equilibrium will be at _____, with a _____ price level.

• A)B; higher
• B)B; lower
• C)C; higher
• D)C; lower

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Definitions:

Beginning Inventory

The value of all the inventory that a company has at the start of an accounting period, before any purchases or sales have been made.

Ending Inventory

The total value of all inventory that a business has in stock at the end of an accounting period.

Direct Materials

Raw materials that can be directly attributed to the production of a specific product.

Direct Materials

Raw materials and components that are directly used in the manufacturing of a product.