Refer to the Graphs, Where the Subscripts on the Labels

question 49

Multiple Choice

Refer to the graphs, where the subscripts on the labels denote years 1 and 2. From the graphs we can clearly conclude that the economy

• A) is not at full employment in either year.
• B) is at full employment in year 1 but not in year 2.
• C) is at full employment in year 2 but not in year 1.
• D) is at full employment in both years.

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Definitions:

Price Charge

The amount of money demanded by a seller for a product or service, essentially the cost to the buyer.

Marginal Revenue Curve

A graphical representation that shows how the addition of one more unit of a good or service sold affects the total revenue of a business.

Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity of that good consumers are willing to buy.

Long-Run Equilibrium

A state in economics where all factors of production and economic variables are in balance, and no external pressures are causing change.