Refer to the Information Provided in Figure 13

question 16

Multiple Choice

Refer to the information provided in Figure 13.3 below to answer the questions that follow. Figure 13.3
-Refer to Figure 13.3.Assume the economy is at Point A.Higher oil prices shift the aggregate supply curve to AS2.If the government decides to counter the effects of higher oil prices by increasing net taxes,then the price level will be ________ than P2 and output will be ________ than Y2.

• A)greater;greater
• B)greater;less
• C)less;less
• D)less;greater

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Definitions:

Variable Manuf. Cost

Expenses that vary in direct relation to the amount of production, including costs like raw materials and direct labor.

Unavoidable Allocated Fixed Corporate Costs

These are fixed costs that are essential and non-avoidable, allocated across different departments or projects within a corporation.

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, indicating how much contributes to covering fixed costs and generating profit.