The aggregate supply curve slopes:
A)downward because firms can sell more, and hence, will produce more when prices are lower.
B)downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more.
C)upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time.
D)upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit.

Question

Quizplus · Accepted Answer

The aggregate supply curve slopes upward because, in the short run, firms can purchase some inputs at fixed costs, allowing them to increase production as prices rise, leading to higher profits.

The Aggregate Supply Curve Slopes