Why Does the Short-Run Aggregate Supply Curve Shift to the Left

question 173

Multiple Choice

Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand?

• A)Workers and firms adjust their expectations of wages and prices downward, and they accept lower wages and prices.
• B)Workers and firms adjust their expectations of wages and prices downward, and they push for higher wages and prices.
• C)Workers and firms adjust their expectations of wages and prices upward, and they push for higher wages and prices.
• D)Workers and firms adjust their expectations of wages and prices upward, and they accept lower wages and prices.
• E)Workers and firms adjust their expectations of output downward, firms accept lower profits, and workers accept lower wages.

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Definitions:

Price Range

The spread between the highest and lowest selling price of a product or service in the market.

Pure Competition

A market structure characterized by a large number of small firms producing identical products, with no single firm able to influence the market price.

Commodity Products

Basic, undifferentiated products or raw materials that are interchangeable with others of the same type.

Agribusinesses

Companies involved in the agricultural industry, dealing with the production, processing, and distribution of agricultural products.