A Decrease in the Price Level Will

question 154

Multiple Choice

A decrease in the price level will

• A)decrease consumption because the price of goods is lower
• B)make the consumption function flatter
• C)increase consumption because prices are wages,so people have more income
• D)increase consumption because the value of wealth has increased
• E)decrease consumption because rising interest rates make it more expensive to borrow

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Definitions:

Average Total Cost

The total cost of production divided by the number of units produced, representing the per-unit cost of production.

Total Cost Function

A mathematical representation of the total economic cost of production, which includes both fixed and variable costs, as a function of output level.

Fixed Cost

An expense that remains constant regardless of the volume of products or services produced or sold.

Variable Cost

Expenses that directly fluctuate in relation to the amount of goods or services produced, including labor and materials.