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 the price of each input decreased from $9 to $7, productivity would:
A. remain unchanged and aggregate supply would increase.
B. remain unchanged and aggregate supply would decrease.
C. increase and aggregate supply would increase.
D. decrease and aggregate supply would decrease.
Answer: A
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People debate whether or not the U.S. should allow for greater oil exploration in Northern Alaska. According to the economic way of thinking, the debate is rooted in
A) different perceptions about the additional benefits and the additional costs of oil exploration in Northern Alaska. B) a complete lack of appreciation of the value of wildlife and the ecology of Northern Alaska. C) a complete lack of appreciation of the value of oil in world affairs. D) politics rather than economics.
For each of the following changes, show the effect on the demand curve and state what will happen to market equilibrium price and quantity in the short run
a. Consumers expect that the price of the good will be higher in the future. b. The price of a substitute good rises. c. Consumer incomes fall, and the good is normal. d. Consumer incomes fall, and the good is inferior. e. A medical report is published showing that this good is hazardous to your health. f. The price of the good rises.