The short run aggregate supply curve slopes ____because, everything else held constant, higher prices ____ producers' profits, creating an incentive to ____output.
A) up; increase; increase
B) up; decrease; decrease
C) up; increase; decrease
D) down; increase; increase
E) down; decrease; decrease

Question

Quizplus · Accepted Answer

The short run aggregate supply curve slopes upward because, in the short run, higher prices generally increase producers' profits, which creates an incentive for them to increase output. This is because, in the short run, some costs (like wages) may not immediately increase with prices, leading to higher profits when prices rise.

The Short Run Aggregate Supply Curve Slopes ____Because, Everything Else