As the Multiplier Process Is Working on the Demand Side

question 42

Multiple Choice

As the multiplier process is working on the demand side,

• A)firms will meet the additional demand without raising prices.
• B)firms will meet the additional demand only by raising prices.
• C)firms will not meet the additional demand.
• D)the multiplier process will cease creating demand.

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, measured in terms of opportunity costs.

Long Run

A period in economics where all factors of production and costs are variable, allowing full adjustment to changes.

Demand Curve

A diagram that illustrates the connection between a product's price and the amount of the product that buyers are prepared and capable of buying at different price levels.

Economic Profit

The difference between the total revenue earned by a business and the total costs (both explicit and implicit) of all resources used.