Author Question: A firm's marginal cost is the increase in its total cost divided by the increase in its A) ... (Read 99 times)

burton19126 · **on:** Jun 29, 2018

A firm's marginal cost is the increase in its total cost divided by the increase in its

A) quantity of labor.
B) average cost.
C) output.
D) average revenue.

Question 2

Give examples of factors that decrease short-run aggregate supply. Which way does the SAS curve shift?

What will be an ideal response?

jgranad15 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

Aggregate supply decreases if potential GDP decreases. In addition, cost hikes such as a rise in the money wage rate or the price of oil, decreases short-run aggregate supply. Whenever short-run aggregate supply decreases, the SAS curve shifts leftward.