The Short-Run Aggregate Supply Curve Illustrates the Idea That If

question 121

Multiple Choice

The short-run aggregate supply curve illustrates the idea that if the price level falls, firms will experience:

• A) Falling input costs, so they will increase their output level
• B) No change in input costs, so they will not change their output level
• C) Falling inputs costs, so they will reduce their output level
• D) No change in input costs, so they will reduce their output level

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Definitions:

Unit Product Cost

The complete expense incurred to manufacture a single item, encompassing materials, workforce, and indirect costs.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs.

Variable Costing

A bookkeeping approach that incorporates just the variable costs of production (such as direct materials, direct labor, and variable factory overheads) into the costs of products.

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed overhead.