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The question is why does it happen? This is a highly theoretical situation, but if prices remain the same, the AD curve must be horizontal between output levels of 20,000 to 26,000 units (below the 26,000 possible outputs). Real output is highly sensitive to changes in price.

2007-03-22 06:41:56 · 1 answers · asked by shauna m 1 in Social Science Economics

1 answers

It happens because the price offered by purchasers theoretically won't change as long as it falls within the allowable range.

2007-03-22 06:57:43 · answer #1 · answered by Santa Barbara 7 · 0 0

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