Suppose That Input Prices Respond Very Slowly to Output Price

question 216

Multiple Choice

Suppose that input prices respond very slowly to output price. This will

• A) reduce the value of the multiplier.
• B) increase the value of the multiplier.
• C) have no effect on the value of the multiplier.
• D) either increase or decrease the value of the multiplier depending on the value of the MPC.

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Definitions:

Output

The total amount of goods or services produced by a person, machine, factory, country, etc., within a certain period.

Total Cost Schedule

A detailed list that shows the total cost incurred at various levels of output or production.

Total Variable Cost

The sum of all costs that vary with the output level in the production of goods or services.

Total Fixed Cost

The cumulative total of all costs that do not alter in response to the quantity of production or output.