If Costs Decrease, What Happens to the Aggregate Supply Curve

question 133

Multiple Choice

If costs decrease, what happens to the aggregate supply curve?

• A) It shifts rightward.
• B) It shifts leftward.
• C) Prices move up along the curve.
• D) Prices move down along the curve.
• E) There is no change.

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Definitions:

Product Cost

The total expense incurred in creating a product, including materials, labor, and overhead costs.

Indirect Cost

Expenses that are not directly attributable to a specific product or service, such as administrative and facility costs.

Direct Cost

Expenses that can be directly traced to the production of a specific good or service, such as materials and labor.

Period Cost

Costs that are expensed in the period in which they are incurred; often administrative or selling expenses, not directly tied to production.