The short-run aggregate supply curve illustrates the idea that if the price level falls, firms will experience:
A) Falling input costs, so they will increase their output level
B) No change in input costs, so they will not change their output level
C) Falling inputs costs, so they will reduce their output level
D) No change in input costs, so they will reduce their output level

Question

Quizplus · Accepted Answer

In the short run, input costs are typically sticky, meaning they do not change immediately with the price level. If the price level falls, firms receive less revenue for their products while input costs remain the same, leading them to reduce output.

The Short-Run Aggregate Supply Curve Illustrates the Idea That If