Why Might a Rising Price Level in the Short Run

question 143

Multiple Choice

Why might a rising price level in the short run create an incentive for firms to increase production?  

• A) because costs of production will increase 
• B) because total sales revenue will decrease 
• C) because profits will increase 
• D) because costs of production will increase faster than total revenue

---

Definitions:

Depth Of Processing

A theory referring to how deeply information is processed and thought about, which influences how well it is remembered.

Craik And Lockhart's

Refers to the Levels of Processing theory of memory, proposing that memory retention depends on the depth of processing an item.

Extinction

In behavioral psychology, the gradual weakening and eventual disappearance of a conditioned response when the reinforcement is no longer offered.

Semantic Memory

A type of long-term memory involving the capacity to recall words, concepts, or numbers, which is necessary for the use and understanding of language.