Equilibrium in the Long Run Occurs When

question 39

Multiple Choice

Equilibrium in the long run occurs when:

• A) AD intersects the short-run AS, regardless of output level
• B) AD intersects the short-run AS, regardless of price level
• C) AD intersects the short-run and the long-run AS curves at the same point
• D) The short-run AS curve intersects the long-run AS curve

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Definitions:

Fixed Costs

Fixed expenses that are unaffected by production or sales volumes, encompassing costs like rent, employee salaries, and insurance fees.

Variable Costs

Costs that change in proportion to the level of production or sales volume, such as raw materials and direct labor.

Break-even Sales

The amount of revenue required to cover both the variable and fixed costs of production, leading to a situation where a business makes neither profit nor loss.

Variable Costs

Costs that vary directly with the level of production output.