The output effect refers to how
A) lower prices affect the quantity sold.
B) firms can set their prices.
C) firms choose their quantities.
D) lower prices affect revenue.
E) lower output affects the price.

Question

Quizplus · Accepted Answer

The output effect refers to the impact of a change in price on the quantity sold. In other words, it measures how changes in price affect the amount of output produced and sold by a firm. So, option A is the correct choice as it directly relates to the impact of lower prices (change in price) on the quantity sold (output effect).

The Output Effect Refers to How