The aggregate supply curve is
A) the sum of all individual firms' supply curves.
B) vertical in the short run.
C) downward sloping in the short run.
D) upward sloping in the short run.
E) upward sloping both in the short run and the long run.

Question

Quizplus · Accepted Answer

The aggregate supply curve is upward sloping in the short run. This is because in the short run, input prices are fixed, so as output prices rise, firms can increase production and make a profit. However, in the long run, input prices may adjust to changes in output prices, causing the aggregate supply curve to become more elastic or even vertical.

The Aggregate Supply Curve Is