Suppose That the Slope of the AE Curve Is 0

question 285

Multiple Choice

Suppose that the slope of the AE curve is 0.67. Then a $100 increase in autonomous spending means equilibrium expenditure will

• A) decrease by $200.
• B) increase by $200.
• C) decrease by $300.
• D) increase by $300.

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Definitions:

Average Total Cost

The total cost of production divided by the number of units produced, encompassing both fixed and variable costs.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price taker behavior.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that sellers are willing to supply.

Upward Sloping

A term often used in economics to describe a curve or line that increases in height as it moves from left to right, indicative of a positive relationship between two variables.