The Main Reason That Firms Adjust Their Output When the Price

question 224

Multiple Choice

The main reason that firms adjust their output when the price level changes is that

• A)uncertainty causes a drop in output.
• B)taxes cause a supply-side reaction.
• C)their profit margins change.
• D)increased risks lead to a change in output.
• E)All of the above are correct.

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Definitions:

Production Possibilities Curves

A graphical representation that shows the maximum possible output combinations of two goods or services an economy can produce given its available resources and technology.

Comparative Advantage

The proficiency of either a person, a company, or a country in crafting a good or providing a service, which comes at a lesser opportunity cost than that offered by rival parties.

Domestic Demand

The total demand for goods and services within a country's borders.