If Wages and Other Costs Fully Adjust to Changes in Prices

question 14

Multiple Choice

If wages and other costs fully adjust to changes in prices in the long run, the long-run aggregate supply curve is

• A) vertical.
• B) horizontal.
• C) positively sloped.
• D) negatively sloped.

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Definitions:

Market Costs

Expenses incurred by companies during the production and distribution of goods or services in the marketplace.

Hydraulic Lifts

Mechanical devices that use fluid pressure to raise or lower objects, often used in automotive repairs and construction.

Returns to Scale

The rate at which production output increases as inputs are increased proportionally, indicating economies, diseconomies, or constant economies of scale.

Labor Hours

The total number of hours worked by all employees for a specific period of time.