Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:

Excess capacity is defined as the difference between a firm's maximum possible output and its actual output

a. True b. False

Four propane delivery firms have a tacit agreement to charge a service fee of $50 in addition to $5 per gallon of propane. If the firms' cost of propane increases and one of the four firms advertises that it will increase the service fee to $75 and raise the cost of a gallon of propane to $5.50 next month, this is an example of ________.

A) a preannouncement B) price leadership C) a meet-the-competition clause D) a precommitment