Figure 12-3 -Refer to Figure 12-3.Suppose That Investment Spending Increases by $10

question 124

Multiple Choice

Figure 12-3
-Refer to Figure 12-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP₁ to GDP₂.If the MPC is 0.9,then what is the change in GDP?

• A)$9 million
• B)$10 million
• C)$90 million
• D)$100 million

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Definitions:

Marginal Revenue

The additional income received from selling one more unit of a good or service; it's a critical concept in business and economics for understanding how to maximize profit.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, resulting in the cost per unit of production decreasing with increasing scale.

Average Total Cost Curve

Illustrates the average cost per unit of output, combining both fixed and variable costs, at different levels of production.

Profit-maximizing Monopolist

A monopolist who determines the quantity of output and price levels that result in the highest possible profits, given its unique market power.