Exhibit 10.2 -Refer to Exhibit 10.2, Which Shows the Short-Run Aggregate Supply

question 151

Multiple Choice

Exhibit 10.2

-Refer to Exhibit 10.2, which shows the short-run aggregate supply curve of an economy. If the economy is currently producing at Y₂, long-run equilibrium will most likely be established by a(n) _____

• A) increase in short-run aggregate supply.
• B) decrease in short-run aggregate supply.
• C) decrease in potential output.
• D) increase in potential output.
• E) rightward shift of the aggregate demand curve.

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Definitions:

Divestiture

The opposite of an acquisition. That is, a company sells a portion of its assets, often a whole division, to another firm or individual.

Market Value

The current price at which an asset or service can be bought or sold in the marketplace, reflecting the value as perceived by the market participants.

Acquiring Firm

This is a company that purchases most or all of another company's shares to gain control over that company.

Replacement Cost

The cost to replace an asset of a company at its current price, without considering depreciation.