Which of the Following Is True of the Expansion Path

question 26

Multiple Choice

Which of the following is true of the expansion path?

• A)It always slopes upward.
• B)It slopes upward as long as input prices are constant.
• C)It slopes upward as long as the firm uses more of both inputs as output increases.
• D)It is always linear,but not necessarily upward-sloping.

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Definitions:

Producer Surplus

The divergence between what producers expect to get for a good or service and the actual compensation they receive.

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved in a market.

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change in response to price changes.

Deadweight Loss

An economic inefficiency that occurs when the total welfare in a market is not maximized, resulting from distortions such as taxes, subsidies, or monopolies.