In the Case of a Permanent Negative Supply Shock

question 223

Multiple Choice

In the case of a permanent negative supply shock

• A) only the long-run aggregate supply curve shifts leftward.
• B) only the short-run aggregate supply curve shifts leftward.
• C) both the long-run and short-run aggregate supply curves shift leftward.
• D) there are no shifts in either the long-run or short-run aggregate supply curve.

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Definitions:

Marginal Costs

The advance in complete cost due to the manufacturing of one additional unit of a good or service.

Cournot Duopolists

Firms in a duopoly market structure that base their competition strategies on the quantity of output, assuming the reaction of the other firm to find an equilibrium.

Demand for Wine

The desire and willingness of consumers to purchase wine at various prices, influenced by factors such as income, tastes, and substitutes.

Imports

Goods or services brought into one country from another for sale.