The Long-Run Supply Curve Would Be Perfectly Elastic When

question 103

Multiple Choice

The long-run supply curve would be perfectly elastic when

• A) an increase in demand does not cause a change in product price.
• B) an increase in demand causes an increase in product price.
• C) a decrease in demand causes an increase in short-run supply.
• D) a decrease in demand causes an increase in product price.

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Definitions:

Total Cost Method

An accounting method that includes all costs related to the production of goods when calculating inventory cost.

Nonproduction Costs

Expenses not directly associated with the manufacturing or production of goods, such as selling, administrative, and other overhead costs.

Production Costs

Expenses directly associated with the creation of goods or services, including raw materials, direct labor, and manufacturing overhead.

Markup

The amount added to the cost price of goods to cover overhead and profit.