Question

if improvements occur with any of the four factors of production what occurs with the real output?

A. it shifts to the left
B. it shifts upward
C. it shifts to the right
D. it shifts downward

Answer 1

Answer:

c. it shifts to the right

Explanation:

Output refers to the total production in the economy. It is equivalent to the total quantity of goods and services supplied in the economy per period. The total output is equivalent to the aggregate supply. Therefore, the output curve will behave as the aggregate supply curve.

Favorable economic conditions increase the total output by firms. Improvement in factors of production will have the same effect as improvement in technology or reduction in taxes. A fall in the price of outputs will encourage more firms to produce more, making the curve to shift to the right.