-In the Above Figure, the Aggregate Demand Curve Is AD₂

question 421

Multiple Choice

-In the above figure, the aggregate demand curve is AD₂, so the short-run equilibrium level of real GDP is

• A) $18 trillion.
• B) $18.5 trillion.
• C) more than $18 and less than $18.5 trillion.
• D) None of the above answers is correct.

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Definitions:

Diseconomies of Scale

Diseconomies of scale occur when a firm's costs per unit increase as the scale of its output increases, often due to inefficiencies that arise from managing a larger organization.

Average Fixed Costs

Costs that do not change with the level of output and are spread over the units of output, thus decreasing per unit as production increases.

Output Increases

Output increases refer to a situation where there is a rise in the quantity of goods or services produced by a company or within an economy.

Total Product

The total output or production achieved by a firm from a given amount of inputs.