Suppose C = 100 + 0

question 50

Multiple Choice

Suppose C = 100 + 0.6(Y - T) and T = 200,I = 140,G = 250 and NX = 50 - 0.2Y.Short-run equilibrium output in this economy equals

• A) 1,050.
• B) 525.
• C) 900.
• D) 700.
• E) 1,250.

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Definitions:

Opportunity Cost

The cost of an alternative that must be forgone in order to pursue a certain action, the benefits you could have received by taking an alternative action.

Marginal Cost

The cost added by producing one more item of a product, a crucial factor in economic decision-making regarding production levels.

Economic Profit

The difference between a firm’s total revenues and its total costs, including both explicit and implicit costs, representing the actual financial gain.

Accounting Profit

The total revenue of a business minus its explicit costs, reflecting the financial gain as recorded in the financial statements.