Which of the Following Accurately Indicates the Relationship Between the Short-Run

question 51

Multiple Choice

Which of the following accurately indicates the relationship between the short-run and long-run aggregate supply curves?

• A)In the short run,aggregate supply is sloped upward to the right,and in the long run,it is vertical.
• B)In the short run,aggregate supply is vertical,and in the long run,it is sloped upward to the right.
• C)In the short run,aggregate supply is downward sloping,but in the long run,it is sloped upward to the right.
• D)In the short run,aggregate supply is sloped upward to the right,but in the long run,it is downward sloping.

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Definitions:

AVC

Average variable cost refers to the total variable cost per unit of output, calculated by dividing the total variable costs by the amount of output produced.

Price

The amount of money required to purchase a good or service, often determined by factors such as supply and demand.

Perfectly Competitive Firm

A company that operates in a market where there are many buyers and sellers, the product is homogeneous, and there are no barriers to entry or exit.

Normal Profit

Normal profit occurs when a firm's total revenue is equal to its total costs, including the opportunity costs of capital, providing no incentive for entry or exit in the industry.