The Aggregate Supply Curve Is

question 26

Multiple Choice

The aggregate supply curve is

• A) vertical in the short run
• B) horizontal in the short run
• C) the sum of all of the supply curves of individual firms in the economy
• D) downward sloping in the short run
• E) upward sloping in the short run

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Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs - direct materials, direct labor, and variable manufacturing overhead - in the cost of goods sold.

Absorption Costing

In this method of accounting, the price of manufacturing a product is calculated by summing the costs of direct materials, direct labor, and all manufacturing overheads, variable and fixed alike.

Fixed Manufacturing Overhead

The total of all costs related to manufacturing that do not change with the level of production, such as salaries of managers and rent of the factory.

Divisional Segment Margin

The profit margin for a specific division or segment of a company, calculated by subtracting direct and allocated expenses from segment revenues.