Along a Short-Run Aggregate Supply Curve, a Decrease in the Price

question 214

Multiple Choice

Along a short-run aggregate supply curve, a decrease in the price level means that

• A) more output is produced as consumer demand increases.
• B) less output is produced as firms decrease production.
• C) more output is produced as firms increase production because wages fall more than the price level falls, making it profitable to hire more workers.
• D) output does not change because firms do not change the quantity they produce.

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Definitions:

Units of Production

A method of depreciation that allocates the cost of an asset over its useful life based on the number of units it produces or its operational hours.

Budgeted Units

The quantity of product or services that a company plans to produce or sell in a specific period, detailed in its budget.

Inventory

The total amount of goods and materials held by a business for the purpose of resale or production, including raw materials, work-in-progress, and finished goods.

Manufactured Units

Manufactured units refer to the total number of units produced by a company during a specific period through its manufacturing process.