Producers Are Willing and Able to Offer Greater Quantities for Sale

question 185

Multiple Choice

Producers are willing and able to offer greater quantities for sale at higher prices because

• A)they have the incentive to pay the increasing opportunity cost of resources to attract them from alternative uses
• B)they will decrease their profits by expanding production at higher prices
• C)the government orders them to do so
• D)lower prices attract new firms, which have higher costs of production
• E)they hire superior quality, higher-priced resources as production expands

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Definitions:

Recessionary Gap

A situation where the real GDP is lower than the potential GDP at full employment, indicating underutilized resources.

Inflationary Gap

A scenario where aggregate demand exceeds aggregate supply at the level of full employment, leading to an increase in general price levels.

Equilibrium GDP

The level of Gross Domestic Product where aggregate supply equals aggregate demand, indicating an economy in balance without tendency to change.

Full Employment GDP

The total market value of all goods and services produced domestically by a country when all available resources are fully utilized.