Refer to the accompanying figure. Based on the figure, when PAE = 400 + 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 = 400 + 0.5Y, short-run equilibrium output equals: A)1,200. B)400. C)600. D)800.
Brand: Quizplus
Rating: 4.8 (32 reviews)

Question

Refer to the accompanying figure.  Based on the figure, when PAE = 400 + 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 800.

Refer to the Accompanying Figure