On the Graph Above,a Permanent Tax Reduction,assuming That There Is

question 18

Multiple Choice

On the graph above,a permanent tax reduction,assuming that there is a permanent effect on aggregate supply,is likely to move the economy from point 1 to point ________.

• A)2
• B)8
• C)6
• D)3

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Definitions:

Average Variable Cost

The variable cost per unit of output, calculated by dividing total variable costs by the quantity of output produced.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.

Total Variable Cost

The sum of all costs that vary with output level, including expenses such as labor and raw materials, but not fixed costs like rent.

Output

The total amount of goods or services produced by an individual, firm, or country.