If the Real National Output Is Less Than the Equilibrium

question 35

Multiple Choice

If the real national output is less than the equilibrium real national output producers find

• A)their inventories decreasing and expand their production.
• B)their inventories increasing and expand their production.
• C)their inventories decreasing and contract their production.
• D)their inventories increasing and contract their production.

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Definitions:

Option to Abandon

A business decision making tool that allows a company to cease an investment or project if it turns out to be financially nonviable, minimizing losses.

Direct Labor Costs

The total cost of all the labor that is directly involved in the production of goods or the performance of services.

Variable Cost

Expenses that undergo alteration in response to the volume of production executed.

Office Rent

The cost associated with leasing a space for business operations or administrative work.