-Refer to Figure 11-2

question 66

Multiple Choice

-Refer to Figure 11-2. Comparing the static budget to the actual costs, we can conclude that

• A) the manager spent more than should have been spent.
• B) immediate action is needed to reduce costs.
• C) the plant manager was clearly not efficient.
• D) the plant manager should be dismissed.
• E) None of these.

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Definitions:

Short-Run Aggregate Supply Curve

It depicts the relationship between the price level and the quantity of goods and services that firms are willing and able to produce in the short run, while some production costs are fixed.

Long-Run Aggregate Supply Curve

A graphical representation showing the relationship between the overall price level and the total output produced by an economy when all factors of production are variable.

Sticky Price Theory

An economic theory suggesting that prices of goods do not adjust immediately to changes in supply and demand, leading to disequilibrium in the market.

Sticky Wage Theory

The hypothesis that wages do not adjust quickly to changes in economic conditions, leading to unemployment and other inefficiencies.