Figure 6.5 -Figure 6.5 Shows the Short-Run and Long-Run Effects of an of an Increase

question 10

Multiple Choice

Figure 6.5
-Figure 6.5 shows the short-run and long-run effects of an increase in demand of an industry. The market is in equilibrium at point A, where 100 identical firms produce 6 units of a product per hour. If the market demand curve shifts to the right, which of the following statements is TRUE in the short run?

• A) The market price rises to $12, which is greater than the average total cost.
• B) Each existing firm maximizes its profit by producing the output where marginal cost equals $12.
• C) Each existing firm produces two more units per hour, compared to its initial profit maximizing output level at point A.
• D) all of the above

Learn how to analyze the audience and situation to tailor the presentation content and delivery.

Understand the importance of practicing the presentation to gauge timing and flow.

Acknowledge the significance of storytelling and logical structuring in presentations.

Understand the distinction between linear and nonlinear presentations and their respective organizational structures.

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Definitions:

Monetary Rules

Guidelines used by central banks to manage the supply of money in an economy, aiming to achieve macroeconomic stability.

Active Approach

A strategy that involves frequent decision making and adjustments, often used in context with investing or policy making.

Policy Announcement

A policy announcement is an official statement made by a government or institution detailing specific plans or changes in policy aimed at affecting economic or social outcomes.

Money Expansion

The increase in the total quantity of money in circulation within an economy, often achieved through central banking policies.