All else constant, an increase in the price of a good will cause the quantity supplied to increase

Refer to Figure 12-7. If the market price is P3 the firm

A) will earn enough revenue to cover its variable costs but not its fixed costs. B) will break even. C) will make a profit. D) will produce a quantity of Q1.

Within the framework of the AD/AS model, if consumers and investors become more pessimistic about the future direction of the economy, this will lead to

a. an increase in aggregate demand. b. a decrease in aggregate demand. c. an increase in long-run aggregate supply (LRAS shifts to the right). d. a reduction in the natural rate of unemployment.