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Which of the Following Could Explain Why There Is an Increase

question 47

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Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls?


Definitions:

Allocative Inefficiency

A situation in which resources are not distributed optimally among producers or consumers, leading to a loss in economic efficiency.

Profit-Maximizing Output

The point of production where a company reaches its maximum profit, occurring when marginal cost is equal to marginal revenue.

Marginal Cost

The bump in expenditure for manufacturing an additional unit of a product or service.

Price

The cost in financial terms anticipated, necessitated, or disbursed for something.

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