The AS Curve Slopes Upward Because

question 1

Multiple Choice

The AS curve slopes upward because:

• A) all firms will increase their prices in response to an increase in aggregate demand, but some will increase their output and others will decrease their output.
• B) all firms will increase their prices, but not their output in response to an increase in aggregate demand.
• C) some firms will increase their prices and their output in response to an increase in aggregate demand.
• D) all firms will increase their prices and their output in response to an increase in aggregate demand.

---

Definitions:

Purely Competitive

A market scenario where products are identical, leading to numerous sellers and buyers where no single entity can influence market prices.

Marginal Cost

The cost of producing one additional unit of a product or service, crucial for decision-making about production levels and pricing.

Opportunity Cost

The cost of foregone alternatives when one choice is made over another, representing the benefits that could have been gained by choosing the next best alternative.

Purely Competitive

Refers to a market structure characterized by a large number of small firms, a homogeneous product, and very easy entry and exit.