Suppose the Stock Market Rises, Causing a Rapid Increase in Consumers

question 18

Multiple Choice

Suppose the stock market rises, causing a rapid increase in consumers' wealth.This would lead to

• A)a downward movement along the consumption function.
• B)a downward shift of the consumption function.
• C)an upward movement along the consumption function.
• D)an upward shift of the consumption function.

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Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced; it varies with production levels.

Average Fixed Cost

The constant expenses associated with production, which remain unaffected by the amount of goods produced, divided by the number of items made.

Average Variable Cost

The total variable cost of production divided by the quantity of output produced.

Average Total Cost

The total cost of production divided by the quantity of output produced, illustrating the average cost per unit of output.