Exhibit 8-4 -Refer to Exhibit 8-4.A Movement from Point a to Point

question 202

Multiple Choice

Exhibit 8-4
-Refer to Exhibit 8-4.A movement from point A to point B on SRAS₁ would have been the result of

• A) a decrease in the price level.
• B) an increase in the price level.
• C) an adverse supply shock.
• D) a beneficial supply shock.

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Definitions:

Retail Price

The cost at which goods or services are sold to the public, typically higher than the wholesale price to include a markup for profit.

Manufacturer Markup

The difference between the cost to produce a good and its selling price, often added by manufacturers to cover costs and generate profit.

Exclusion of Markup

The practice of not including an additional amount to the cost of goods when pricing them, often to maintain competitive pricing.

Double Marginalization

A pricing issue that occurs when two or more entities in the same supply chain add their markup, leading to higher prices for the end consumer.