The Short Run Aggregate Supply (SRAS)curve Shifts Left When Oil

question 29

Multiple Choice

The short run aggregate supply (SRAS) curve shifts left when oil supply shocks occur because

• A)fewer goods are produced at any given price level due to higher oil prices.
• B)oil-based production has increased at any given price level.
• C)average total cost will fall at any given output level.
• D)the price level will fall at any given output level.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, including costs related to factory operation but not directly traceable to the product, such as maintenance and utilities.

Work in Process

Inventory that is in the production process but is not yet completed.

Overapplied

A situation where the allocated amount of indirect costs exceeds the actual amount incurred.

Underapplied

A situation where the applied manufacturing overhead is less than the actual manufacturing overhead incurred, indicating that the costs have not been fully allocated.