Assuming That a Is Positive, How Are Theories of Short-Run

question 121

Multiple Choice

Assuming that a is positive, how are theories of short-run aggregate supply expressed mathematically?

• A) quantity of output supplied = natural rate of output + a(actual price level - expected price level)
• B) quantity of output supplied = natural rate of output + a(expected price level - actual price level)
• C) quantity of output supplied = a(actual price level - expected price level) - natural rate of output
• D) quantity of output supplied = a(expected price level - actual price level) - natural rate of output

Differentiate between short-run and long-run decision-making in purely competitive markets.

Recognize the conditions under which firms enter or exit the market.

Comprehend the relationship between price, average total cost, and marginal cost in long-run equilibrium.

Analyze the impact of consumer demand changes on market equilibrium in different types of industries.

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Definitions:

Emissions Permit

A legal right granted by a government to emit a certain amount of pollutants into the atmosphere; often used in cap and trade programs.

Refundable Deposit

An amount of money given as security for an item that is intended to be returned, with the promise of repayment.

Marginal Private Cost

The change in a firm's total costs that comes from making one additional unit, considering only private costs without externalities.

Abatement Cost

The cost associated with reducing or eliminating negative environmental impacts, such as pollution.