The Long-Run Aggregate Supply Curve Is

question 114

Multiple Choice

The long-run aggregate supply curve is

• A) horizontal at the full-employment level of real Gross Domestic Product (GDP).
• B) vertical at the full-employment level of real Gross Domestic Product (GDP).
• C) sloping upward due to the effects of price level changes on real Gross Domestic Product (GDP).
• D) the same as the short run aggregate supply (SRAS) curve.

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Definitions:

Profit-Maximizing Price

The price level at which a firm maximizes its profits by balancing its production costs with the perceived value to customers, ensuring the highest possible profit margin.

Entry Barriers

Factors that prevent or hinder companies from entering a particular market, including high start-up costs, stringent regulations, and established competitors.

Competitive Forces

Elements in the external environment that influence the competitiveness of a company, including rivalry among existing competitors, threat of new entrants, threat of substitute products, bargaining power of buyers, and bargaining power of suppliers.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the profitability of an enterprise beyond basic financial profit.