The short-run aggregate supply curve is positively sloped because:

(A) wages and other costs of production respond immediately to changes in prices.

(B) profit is lower when prices increase, so output decreases.

(C) workers are willing to work for lower wages rather than be laid off.

(D) higher prices lead to higher profit and higher output.

Question

Mitchell

Business

27 October, 22:45

The short-run aggregate supply curve is positively sloped because:

(A) wages and other costs of production respond immediately to changes in prices.

(B) profit is lower when prices increase, so output decreases.

(C) workers are willing to work for lower wages rather than be laid off.

(D) higher prices lead to higher profit and higher output.

+5

Answers (1)

Know the Answer?

Kamden Bond · Answer 1

(D) higher prices lead to higher profit and higher output.

Explanation:

When the price increase, the profitability of the firm increase, therefore firm produces more at high price. Hence at high price output increase. This is the reason why SRAS curve is positively sloped.