The Figure Given Below Represents the Equilibrium Real GDP and Price

question 84

Multiple Choice

The figure given below represents the equilibrium real GDP and price level in the aggregate demand and aggregate supply model.
Figure 8.3

-Refer to Figure 8.3. If AS1 and AD1 represent the initial aggregate demand and supply in the economy, the long-run equilibrium real GDP will be _____ billion.

• A) $100
• B) $200
• C) $300
• D) $400
• E) $500

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Definitions:

Marginal Revenue

The additional income earned by selling one more unit of a good or service.

Product Differentiation

The act of setting a product or service apart from others in order to increase its appeal to a designated target market.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for some degree of market power and product differentiation.

Long-Run Demand Curve

A graphical representation showing the relationship between the quantity demanded of a good and its price over a long time period, considering adjustments in factors other than price.