The Aggregate Demand Curve Shows the Quantity of Domestic Product

question 76

Multiple Choice

The aggregate demand curve shows the quantity of domestic product

• A)produced at each possible price level.
• B)demanded and produced at each possible price level.
• C)that is exported at each possible price level.
• D)demanded at each possible price level.

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Diminishing Marginal Returns

The principle that as additional units of a factor of production are added, the increase in output will eventually decrease, holding other factors constant.

Constant Returns to Scale

A situation where increasing all inputs by a certain factor results in output increasing by the same factor, indicating proportionate scalability of production.

Increasing Returns to Scale

Occurs when an increase in all inputs by a certain percentage causes a more than proportional increase in output.