-In the Above Figure, If Initial Equilibrium Is at Point

question 89

Multiple Choice

-In the above figure, if initial equilibrium is at point A and if there is an unanticipated increase in aggregate demand from AD1 to AD2, then

• A) in the short run real output will remain at Y1.
• B) in the short run real output will increase above Y1, but in the long run it will return to Y1.
• C) in the long run real output will increase above Y1.
• D) real output will increase above Y1 in both the short run and in the long run.

Calculate the beginning and ending inventories for various stages of production.

Understand cost behavior and how costs are affected by changes in activity level.

Identify costs as direct or indirect relative to a specific cost object.

Analyze the financial impact of different business decisions.

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Definitions:

Marginal Revenue

Marginal Revenue is the increase in revenue resulting from the sale of one additional unit of a product or service.

Marginal Cost

The financial impact of manufacturing an additional unit of a product or service.

Profit Maximization

A company's objective to make the most amount of profit possible with its current resources and market conditions.

Competitive Firm

A company that operates in a market with many buyers and sellers, where each has a negligible effect on the market price.