Which of the following explains the effect of prices on profits in the short-run?
a. The direct relationship between aggregate quantity demanded and national output.
b. The direct relationship between aggregate quantity supplied and the price level.
c. The inverse relationship between aggregate quantity demanded and national output.
d. The inverse relationship between aggregate quantity supplied and profits.
e. The inverse relationship between aggregate quantity supplied and national output.
Question 2
Economists use the term ceteris paribus to indicate that:
a. the analysis is true for the individual but not for the economy as a whole.
b. supply and demand are in balance.
c. their conclusions are based on normative rather than positive economic analysis.
d. other things are assumed to remain constant.