The Slope of the Aggregate Supply Curve Increases as Output

question 131

Multiple Choice

The slope of the aggregate supply curve increases as output increases because

• A)the cost of resource use increases as potential is reached.
• B)consumers are willing to pay more as output expands.
• C)firms substitute capital for labor as prices increase.
• D)firms substitute capital for labor as capacity is reached.

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Definitions:

Competitive Firms

Businesses that operate in a market where they must compete with other firms for customers, characterized by the inability to control market prices.

Product Markets

Markets where finished goods and services are bought and sold, as opposed to markets for inputs used in production.

Government Mandate

A government mandate is a requirement set by governments that individuals or organizations must follow, often under penalty for non-compliance.

Employer Prejudice

Biases or preconceived notions held by employers against certain groups of people, often affecting hiring and work practices.