When Production Costs Rise, in the Short Run

question 35

Multiple Choice

When production costs rise, in the short run:

• A)the aggregate-supply curve shifts down to the right
• B)the aggregate-demand curve shifts down to the left
• C)the aggregate-demand curve shifts up to the right
• D)the aggregate-supply curve shifts up to the left
• E)both the aggregate-demand curve and the aggregate-supply curve shift to the left

---

Definitions:

Pareto Efficient

A state of allocation where it is impossible to make any one individual better off without making at least one individual worse off.

Utility Function

A mathematical representation that ranks the preferences of an individual consumer for different bundles of goods.

Initial Endowment

The original allocation of resources, including assets and goods, available to an individual or entity at the start of an economic analysis.

Utility Function

A formula that quantifies the happiness or satisfaction a consumer gains from consuming different combinations of goods and services.