Suppose that real domestic output in an economy is 300 units, the quantity of inputs is 50, and the price of each input is $9. If productivity increased such that 400 units are now produced with the quantity of inputs still equal to 50, then per-unit production costs would:
A. increase and aggregate demand would decrease.
B. decrease and aggregate demand would increase.
C. decrease and aggregate supply would increase.
D. decrease and aggregate supply would decrease.
Answer: C
You might also like to view...
The state of Georgia offers free college tuition to high school students with a "B" average. In 2007, the state raised the requirement so that fewer students qualified for the scholarship
At the same time, Georgia increased state spending on health care. Suppose that college education is on the vertical axis and health care is on the horizontal axis of a PPF. These changes A) are example of a tradeoff. B) are an example of incentives. C) will cause a shift out of the PPF. D) will cause a shift in the of the PPF.
Refer to Figure 15-9. What is the difference between the monopoly output and the perfectly competitive output?
A) 140 units B) 240 units C) 340 units D) 560 units