The Long-Run Aggregate Supply Curve Is ________ Because Along It

question 287

Multiple Choice

The long-run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________.

• A) vertical; falls
• B) vertical; rises
• C) upward sloping; falls
• D) upward sloping; stays constant

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Definitions:

LRMC

Long-Run Marginal Cost, which is the additional cost of producing one more unit of output when all inputs, including capital, are variable.

LRAC

Long-Run Average Cost, a curve that shows the lowest possible average cost of production, allowing all factors of production to vary.

Long-run Elasticities

Measure of responsiveness of demand or supply to changes in price or income, considered over a period long enough for all adjustments to be made.

Short-run Elasticities

Measures of how responsive the quantity demanded or supplied of a good is to a price change over a short period.