The aggregate supply curve is usually assumed to get progressively steeper at relatively higher levels of output because
A)of increasing factor prices.
B)of increasing productivity of the factors of production.
C)of diminishing marginal productivity of the factors of production.
D)of rising competition among price setters.
E)of excess capacity at higher levels of output.

Question

Quizplus · Accepted Answer

The slope of the aggregate supply curve is determined by the marginal cost of production, which is affected by the marginal productivity of factors of production. As output increases, the marginal productivity of factors of production decreases due to the law of diminishing marginal returns, making it more expensive to produce each additional unit of output. Therefore, the aggregate supply curve gets progressively steeper at relatively higher levels of output.

The Aggregate Supply Curve Is Usually Assumed to Get Progressively