If consumption changes because of a change in a factor other than the price level, then the
A) economy moves from one point on an AD curve to another point on the same curve.
B) AD curve shifts.
C) economy moves from one point on a short-run aggregate supply (SRAS) curve to another point on the same curve.
D) SRAS curve shifts.
E) none of the above
B
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Draw an aggregate supply and aggregate demand graph which shows the economy producing an output which exceeds potential output in the short run, and the adjustment that will occur as the economy adjusts to long-run equilibrium
What will be an ideal response?
Suppose that a monopolistically competitive firm is in long-run equilibrium. The firm's demand curve is tangent to its average cost curve at Q = 25 . Average cost is minimized at Q = 35, where average cost is $50 . Which of the following is true?
a. This firm charges $50 for the good. b. This firm charges more than $50 for the good. c. This firm charges less than $50 for the good. d. The firm has excess capacity at all output levels greater than 35 units. e. Average cost is $50 at the profit-maximizing output level.