All Except One of the Following Statements Concerning the Equilibrium

question 8

Multiple Choice

All except one of the following statements concerning the equilibrium level of income are correct.Which is incorrect?

• A)There will be no tendency for firms to increase or decrease production.
• B)The economy is operating at full employment.
• C)Unplanned investment in inventories will not occur.
• D)Leakages equal injections.
• E)Aggregate expenditures equal income.

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Definitions:

Producer's Surplus

The difference between what producers are willing to accept for a good or service and what they actually receive.

Marginal Cost Curve

A graph showing the change in total production cost that comes from making or producing one additional unit.

Competitive Firm

A company operating in a market where it has little to no market power, and thus sets its prices based on the market conditions.

Variable Factors

In economics, these are inputs or resources whose quantity can be changed in the short term to adjust the level of output.