Use the Figure Below to Answer the Following Question

question 27

Multiple Choice

Use the figure below to answer the following question.

Figure 28.1.1
-Refer to Figure 28.1.1.The figure illustrates an economy initially in equilibrium at the intersection of the SAS0 curve and the AD0 curve.Which of the following shifts the short-run aggregate supply curve from SAS0 to SAS1?

• A)an increase in the price of oil
• B)an increase in the price level
• C)an increase in the marginal product of labour
• D)an increase in the demand for money
• E)a decrease in the money wage rate

Identify conditions under which a firm should continue, reduce, or cease production in the short run.

Apply the principle of marginal revenue and marginal cost to decision-making in price-taker markets.

Interpret economic models and data tables to calculate profit, loss, and optimal production levels.

Distinguish between short-run and long-run decision-making for firms in competitive markets.

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Definitions:

Nonrivalrous Consumption

A consumption characteristic where one individual's use of a good does not reduce availability to others.

Marginal Cost

The cost incurred by producing one additional unit of a good or service.

Simultaneous Consumption

A characteristic of services that indicates they are consumed at the same time as they are produced.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of production and the quantity of output increase.