What Happens to Prices and Output When the Long-Run Aggregate-Supply

question 86

Multiple Choice

What happens to prices and output when the long-run aggregate-supply curve shifts right?

• A) Prices and output both increase.
• B) Prices and output both decrease.
• C) Prices increase and output decreases.
• D) Prices decrease and output increases.

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Definitions:

Fixed Costs Per Unit

The fixed costs associated with a product divided by the number of units produced, highlighting how these costs dilute with increased production.

Joint Products

A scenario in production where a single process yields multiple products simultaneously.

Split-Off Point

The stage in a production process where joint products can be recognized as separate products.

Constant Gross Margin Method

A pricing strategy where the gross margin percentage is kept constant despite variations in product costs.