If the Equilibrium Price Level Is 135 but the Actual

question 34

Multiple Choice

If the equilibrium price level is 135 but the actual price level is 150,then

• A)the quantity of real GDP demanded is greater than the quantity of real GDP supplied.
• B)the quantity of real GDP demanded is less than the quantity of real GDP supplied.
• C)aggregate demand will increase to restore equilibrium.
• D)firms increase their production because they are able to sell their output at a higher than expected price.
• E)aggregate demand will decrease to restore equilibrium.

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Definitions:

Average Total Cost

It is the total cost divided by the number of goods produced, encompassing both fixed and variable costs.

Monopolistic Competitor

A firm operating in a market structure characterized by many producers selling similar but not identical products, leading to some degree of market power and pricing authority.

Marginal Cost

The price of manufacturing an additional unit of a product or service.

Market Demand

The overall amount of a product or service all buyers in a market can and want to buy at different price levels.