The Long-Run Supply Curve Illustrates How the Aggregate Output Supplied

question 75

Multiple Choice

The long-run supply curve illustrates how the aggregate output supplied is _____ the aggregate price level.

• A) positively related to
• B) negatively related to
• C) unrelated to
• D) a one-to-one correspondence with

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Definitions:

Demand

The quantity of a good or service that consumers are willing to buy at a given price over a specific period of time.

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity of goods demanded.

Elastic the Supply Curve

Describes a situation where the supply of a good or service changes significantly in response to changes in price.

Normal Good

A good for which demand increases as the income of consumers increase, holding other factors constant.