Which of the Following Is TRUE

question 206

Multiple Choice

Which of the following is TRUE?

• A) ATC = AVC - AFC
• B) TVC/Q = TC/Q + TFC/Q
• C) ΔTC/ΔQ = ΔAVC/ΔQ
• D) ΔTC/ΔQ = MC

Interpret the effects of changes in aggregate expenditure components on GDP.

Understand the relationship between real GDP, aggregate expenditure, and planned investment.

Calculate and interpret the simple spending multiplier effect.

Analyze the effect of changes in income levels on imports and exports.

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Definitions:

Marginal Cost

The increase in total cost that arises from producing one additional unit of a product.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.

Economic Profit

The divergence between aggregate income and total outlays, inclusive of both tangible and intangible expenses.

Purely Competitive Seller

A seller operating in a market where there are many buyers and sellers and the products are virtually identical, leading to no individual control over prices.