Figure 8.9 -Refer to Figure 8.9.Suppose the Prevailing Price Is $20 and Is

question 72

Multiple Choice

Figure 8.9
-Refer to Figure 8.9.Suppose the prevailing price is $20 and the firm is currently producing 1350 units.In the long-run equilibrium, the firm represented in the diagram

• A)will continue to produce the same quantity.
• B)will reduce its output to 1100 units.
• C)will reduce its output to 750 units.
• D)will cease to exist.

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Definitions:

Marginal Propensity

The incremental change in spending (consumption or saving) that occurs with a change in disposable income.

Multiplier

An economic factor that quantifies the impact of a change in investment, government spending, or other financial activity on the overall economy.

Marginal Propensity

Refers to the increase in personal consumer spending that occurs with an increase in disposable income.

Aggregate Expenditure

The total amount spent on goods and services in an economy at a given level of income during a specific period.