For This Question,assume That Expectations of P and a Are

question 24

Multiple Choice

For this question,assume that expectations of P and A are correct.Now suppose that there is a 4% increase in A.Given this information,which of the following will occur?

• A)the PS relation will shift up by 4%.
• B)the WS relation will shift up by less than 4%.
• C)the WS relation will shift down by 4%.
• D)the PS relation will shift down by 4%.

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Definitions:

Firms

Business organizations or entities engaged in commercial, industrial, or professional activities, aiming to generate profits.

Marginal Cost

The increase in total production costs that arises from producing an additional unit of a good or service.

Ideal

A concept or standard of perfection or excellence that serves as a benchmark or goal.

Price Takers

Entities in a market that accept prevailing prices for goods or services, lacking the market power to influence prices on their own.