The Wealth Effect

question 98

Multiple Choice

The wealth effect:

• A)explains the downward-sloping aggregate demand curve.
• B)explains the upward-sloping aggregate demand curve.
• C)explains the downward-sloping aggregate supply curve.
• D)explains the upward-sloping aggregate supply curve.

Recognize the conditions under which a firm should continue to operate or shut down in the short run.

Comprehend the concept of the long run in economic theory.

Identify the behaviors of average variable cost (AVC) and average total cost (ATC) as output changes.

Know the break-even and shutdown points in both short run and long run scenarios.

---

Definitions:

Nomothetic

An approach in psychology that focuses on studying what we share with others, using statistical methods to derive general laws.

Idiographic

Pertaining to the study or approach focusing on the individual, often used in contrast to nomothetic approaches that focus on generalizations.

Self-actualized Personality

A psychological condition or achievement where an individual realizes their full potential, often associated with peak experiences and true personal fulfillment.

Self-actualization

The realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone.