Given a Fixed Upsloping AS Curve, a Rightward Shift of the AD

question 3

Multiple Choice

Given a fixed upsloping AS curve, a rightward shift of the AD curve will

• A)cause cost-push inflation.
• B)increase real output but not the price level.
• C)increase the price level but not real output.
• D)increase both the price level and real output.

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Definitions:

Marginal Revenue

The additional income from selling one more unit of a good; essentially the change in total revenue from an additional unit sold.

Perfect Competition

An idealized market structure in which there are many buyers and sellers, no barriers to entering or exiting the market, and products are identical.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the true profitability of a firm.

Profit-Maximizing

A method or strategy businesses use to achieve the highest possible profit from their operations.