Within the Framework of the AD/AS Model, in the Long

question 73

Multiple Choice

Within the framework of the AD/AS model, in the long run, output

• A) will exceed the economy's long-run capacity.
• B) will be less than the economy's long-run capacity.
• C) will converge toward the economy's long-run capacity.
• D) must equal approximately 95 percent of the economy's long-run capacity.

---

Definitions:

Average Total Cost

The total cost of production divided by the number of units produced, reflecting the cost per unit.

Competitive Price-searcher Firm

A company that sets its own prices based on its products, costs, and the competitive environment, rather than taking the market price as given.

Average Total Cost

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

Economic Profit

The difference between total revenue and the total opportunity costs of all resources used in production, including implicit and explicit costs.