Explain: "The law of increasing additional cost is an inevitable phenomenon in economics."
What will be an ideal response?
Economic resources are seldom suitable for all types of production. Hence, when society demands more of a particular good or service, an increase in the demand for the resources most adaptable to its production will rise; as more of the good is produced, eventually less efficient inputs will be pressed into production. It is the utilization of these less efficient inputs that gives rise to higher societal cost of production.
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Refer to the figure above. In equilibrium, ________
A) Firm 1 will follow Strategy Y, and Firm 2 will follow Strategy X B) Firm 1 will follow Strategy X, and Firm 2 will follow Strategy Y C) both firms will follow Strategy X D) both firms will follow Strategy Y
In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 120 and real GDP of $15.0 trillion, then it must be the case that
A) aggregate demand has increased. B) aggregate demand has decreased. C) aggregate supply has decreased. D) aggregate supply has increased.