If Firms Sell Exactly What They Expected to Sell,all of the Following

question 100

Multiple Choice

If firms sell exactly what they expected to sell,all of the following will be true except

• A)aggregate expenditure will be greater than GDP.
• B)there is no unplanned change in inventories.
• C)inventories will not change,and GDP and employment will remain stable.
• D)aggregate expenditure will be equal to GDP.

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Definitions:

Implicit Costs

The opportunity costs that arise from using resources that a business already owns rather than earning revenue from those resources elsewhere.

Explicit Costs

Direct, out-of-pocket expenses incurred in conducting a business activity, such as wages, rent, and materials.

Economic Profits

Profits earned by a company after accounting for both explicit (direct) and implicit (opportunity) costs.

Marginal-Cost Curve

A graph that shows the relationship between the marginal cost of producing an additional unit and the total quantity of the product produced.