The aggregate supply curve relates the price level to the quantity of output that firms would like to produce and sell,given the assumption that
A)all firms are price takers.
B)all firms are price setters.
C)the state of technology is constant.
D)the prices of all factors of production are constant.
E)both C and D

Question

Quizplus · Accepted Answer

The aggregate supply curve assumes that the state of technology is constant and the prices of all factors of production are constant. This means that the curve represents the relationship between price level and output when all other factors that could affect production are held constant. However, the curve does not assume that all firms are price takers or price setters. In reality, different firms have different degrees of market power and can affect prices to varying degrees.

The Aggregate Supply Curve Relates the Price Level to the Quantity