Homework Answers
OPTION B- An increase in aggregate demand would lead to deflation .
REASON - When aggregate demand Increases then AD CURVE shifts rightwards and the price level will rise , as it interest the SRAS CURVE at higher price level causing Inflation.
ANS 1. 1. PRICE expected from low price to high price .
1. COMPETITIVE MARKET - lowest price - as firm has many substitute and many competition.
2. DUOPOLY - change more price than Competitive market because the consumer have to pay more due to less substitute .
3. MONOPOLY -highest price single seller can change higher prices as he can control the output .
ANS 2. Output expected from lowest to higher
a. MONOPOLY - Lowest output single seller will produce lower output so that demand exceeds supply and can charge high price .
b. DUOPOLY - Two sellers will produce more output then monopoly to capture big share in market .
c. COMPETITIVE MARKET - Will produce maximum output
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