The slope of the aggregate supply curve increases as output increases because
A)the cost of resource use increases as potential is reached.
B)consumers are willing to pay more as output expands.
C)firms substitute capital for labor as prices increase.
D)firms substitute capital for labor as capacity is reached.

Question

Quizplus · Accepted Answer

The slope of the aggregate supply curve increases as output increases primarily because the cost of producing additional units of output (marginal cost) rises as the economy approaches its full capacity or potential output. This is due to factors such as the increased cost of resource use (e.g., labor and materials) as they become scarcer when output levels are high.

The Slope of the Aggregate Supply Curve Increases as Output