In constructing the short-run aggregate supply curve,we define the short run as the period in which:
A)the price level is constant.
B)output is fixed.
C)profit is constant.
D)the costs of some resources are fixed.
E)the economic growth rate is less than 4 percent.

Question

Quizplus · Accepted Answer

In the short run, some resources costs are fixed, such as wages under existing labor contracts or the rent on leased buildings and equipment. As a result, firms can increase output without incurring higher costs for these fixed resources, leading to a positively sloped short-run aggregate supply curve. Therefore, choice (D) is the best answer.

In Constructing the Short-Run Aggregate Supply Curve,we Define the Short