Figure 11.2 shows the relationship between the price level and real GDP. Suppose the economy is currently at e'. A leftward shift of the short-run aggregate supply curve would return the economy to potential output at:
Definitions:
Average Variable Cost
The total variable cost divided by the total output, indicating the variable cost for producing one more unit of a good or service.
Economic Profit
A measure of profitability that accounts for the full opportunity costs of all resources employed, including both tangible and intangible costs.
Total Revenue
The total amount of money received by a firm from the sale of goods or services before any costs or expenses are subtracted.
Average Variable Cost
The total variable costs (costs that change with production volume) divided by the number of units produced, representing the variable cost per unit.
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