The Misperceptions Theory of the Short-Run Aggregate Supply Curve Says

question 42

Multiple Choice

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

• A)increases by less than expected so that firms believe the relative price of their output has increased.
• B)increases by less than expected so that firms believe the relative price of their output has decreased.
• C)increases by more than expected so that firms believe the relative price of their output has increased.
• D)increases by more than expected so that firms believe the relative price of their output has decreased.

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Definitions:

Average Variable Costs

The total variable costs (costs that change with the level of output) divided by the number of units produced, indicating the average cost of producing each unit.

Industry Giants

The largest and most influential companies within a sector, known for their market domination, innovation, and financial capabilities.

Lower Prices

Lower prices indicate a decrease in the cost that consumers are asked to pay for goods or services, often aimed at boosting sales or competitiveness.

Marketing Mix

The combination of factors that can be controlled by a company to influence consumers to purchase its products, typically includes product, price, place, and promotion.