What happens to aggregate supply when production costs adjust completely to price increases?
a. Both equilibrium output and prices increase
b. Only prices rise; equilibrium output remains fixed
c. Only equilibrium output rises; equilibrium prices remain fixed
d. Equilibrium output falls while prices rise
e. Both equilibrium output and prices remain fixed
b
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If the price of apples rises from $.50 to $1.50 and quantity demanded falls from 1,000 to 900, we can conclude that the price elasticity for apples is
a. -20. b. inelastic. c. elastic. d. unitary.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.
Refer to the given figure.
________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________.
A. Rising; A; C B. Falling; A; B C. Falling; A; C D. Rising; B; C
If the price elasticity of supply is 3, supply is:
A. unaffected by price changes. B. inelastic. C. unit elastic. D. elastic.