Refer to the accompanying figure. Based on the figure, when PAE = 200 + 0.5Y, short-run equilibrium output equals:
A)1,200.
B)400.
C)600.
D)800.

Name: Refer to the accompanying figure. Based on the figure, when PAE = 200 + 0.5Y, short-run equilibrium output equals: A)1,200. B)400. C)600. D)800.
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Question

Refer to the accompanying figure.  Based on the figure, when PAE = 200 + 0.5Y, short-run equilibrium output equals:
A)1,200. 
B)400. 
C)600. 
D)800.

Quizplus · Accepted Answer

Equilibrium occurs where the 45-degree line intersects the PAE line. In this case, intersection occurs at output equal to 400.

Refer to the Accompanying Figure