Figure 12-11 -Refer to Figure 12-11.Suppose the Prevailing Price Is $20 and Price

question 196

Multiple Choice

Figure 12-11

-Refer to Figure 12-11.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium

• A)there will be fewer firms in the industry and total industry output decreases.
• B)there will be more firms in the industry and total industry output increases.
• C)there will be fewer firms in the industry but total industry output increases.
• D)there will be more firms in the industry and total industry output remains constant.

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Definitions:

Saving

The act of setting aside a portion of one’s income for future use, instead of spending it immediately.

Disposable Income

After subtracting income taxes, disposable income is the money remaining for individuals or households to spend or save.

MPC

The marginal propensity to consume, indicating the proportion of an additional unit of income that is spent on consumption.

MPS

Marginal Propensity to Save, which is the portion of additional income that a household saves rather than consumes.