What Impact Does Good Supply Shock Have on the Price

question 105

Multiple Choice

What impact does good supply shock have on the price level and real output?

• A)The price level increases and real output increases.
• B)The price level decreases and real output decreases.
• C)The price level decreases and real output increases.
• D)The price level increases and real output decreases.

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Definitions:

Market Output

The total amount of goods and services produced and offered for sale by all firms in a particular market.

External Cost

Costs that are not borne by the parties involved in an economic transaction but by other members of society.

Efficient Price

A price that reflects all available information and makes the best use of resources, minimizing waste and maximizing value.

Market Output

The total quantity of goods and services produced and supplied by firms in a market at a given price level and time period.