The Short-Run Aggregate Supply Curve Is Upward-Sloping Because

question 20

Multiple Choice

The short-run aggregate supply curve is upward-sloping because:

• A)higher prices discourage the producers to expand output.
• B)higher price levels create incentives to expand output when resource prices remain constant.
• C)lower prices encourage the producers to expand output.
• D)higher price levels create an expectation among producers of still higher price levels.

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Definitions:

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, essentially a measure of producer benefit.

Demand Curve

A graph that shows the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at various prices.

Supply Curve

A graphical representation showing the relationship between the price of a good and the amount of it that suppliers are willing to produce.

Actual Price

The price at which goods or services are sold in the market, as opposed to theoretical or listed prices.