Unpredictable Inflation Can Cause Businesses To

question 79

Multiple Choice

Unpredictable inflation can cause businesses to:

• A) have a hard time planning future production.
• B) cease production until they know how to adjust for inflation.
• C) restrict output and stockpile inventory.
• D) increase production due to expecting future price level changes.

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Definitions:

Alternative

An option or choice that is available as a substitute or replacement for something else.

Market Supply Curve

A graphical representation showing the total quantity of a good that producers are willing to sell at various prices within a given time period.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit from the market, and products that are similar enough to be considered close substitutes, leading to price competition and efficiency.

Linear Marginal Cost

A situation where the additional cost of producing one more unit of output is constant, regardless of the quantity produced.