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3 years ago

Cost-push inflation is a situation in which the:

Business

1 answer:

Irina18 [472]3 years ago

6 0

Answer: b. short-run aggregate supply curve shifts leftward.

Explanation:

Cost Push Inflation occurs when the Aggregate Supply of Goods and Services DECREASES because of an increase in Production costs.

Companies can no longer keep producing at the previous levels they could have because the price of inputs have gone up and they are already at full capacity.

To maintain profit margins they will reduce production to cut costs.

This reduces the supply in the Market and forces the Supply curve left which leads to a higher equilibrium price all else being equal.

In the graph I attached below, you can see how the Short Run aggregate supply curve shifted to the left and took prices up as Demand remained constant.

If you need any clarification do react or comment.

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For the first time in two years, Big G (the cereal division of General Mills) raised cereal prices by 4 percent. If, as a result

Ira Lisetskai [31]

Answer:

the coefficient of elasticity is 0.5. Thus, demand is inelastic.

Explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

Price elasticity of demand = percentage change in quantity demanded / percentage change in price

If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.

Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one

Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.

Price elasticity = 2/4 = 0.5

Because demand is less than1, big g has an inelastic demand.

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allochka39001 [22]

Answer:

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