If Potential Output for an Economy Equals $8 Billion and Actual

question 114

Multiple Choice

If potential output for an economy equals $8 billion and actual output equals $7 billion, then this economy's output gap should be expressed as:

• A)−$1 billion.
• B)$1 billion.
• C)12.5 percent.
• D)−12.5 percent.

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Definitions:

Break-even Point

The point at which total cost and total revenue are equal, resulting in no net loss or gain for a business.

Unit Price

The cost of a single unit of product or measurement, allowing for easy price comparison between different sizes or quantities of the same item.

Unit Variable Cost

The expense incurred from manufacturing an extra unit of a product.

Break-even Chart

A graphical representation that displays the point at which total costs and total revenues are equal, indicating no net loss or gain.