Price Level 3.0 2.0 B 1.0 LRAS SRAS1 300 500 C SRAS2 AD Real Output In the graph above, the expected input prices at point A are input prices at point B. higher than equal to lower than the expected

4.

FOREST owners are seeing the best returns for years as a result of snaring a greater share of the huge Chinese market, but some Kiwi sawmills are running short of logs as a result. In 2009, log sales to China were worth about $530 million, more than double the $236m the previous year, and volumes were also more than double levels in 2008. Log prices remained at historically high levels of about US$145 a cubic metre for A grade logs delivered to China, according to a report from PF Olsen. ...the Timber Industry Federation warns that timber prices are likely to rise at least 10 per cent, after recent log price rises of up to 15 per cent.  Prices for logs kept going up. China has become a key log market for New Zealand and log exports are "way up and forest owners are quite happy", one big forest company executive said. Another forest investor Roger Dickie, of Roger Dickie NZ, said the "log market has definitely improved, quite dramatically in the last few months" as a result of the…

$40,000 37,000 35,000 0 Du 900 Cars per week (a) Flexible price DH + $37,000 DH D D₂ 0 700 900 1150 Cars per week (b) Fixed price Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company: has to adjust both optimal output level and employment accordingly. will never have to adjust the optimal output and employment levels accordingly. has to adjust the optimal output level but not the employment. has to adjust the employment level but not the optimal output.