One explanation for an upward-sloping short-run aggregate supply curve is the misperception effect, which is based on:
A)producers' tendency of increasing supply when they observe falling profit margins with increasing price level.
B)producers' tendency of increasing supply when they observe rising costs of production with decreasing price level.
C)producers' tendency of increasing supply when they observe fixed wage labor contracts.
D)producers' tendency of increasing supply when they observe a rise in prices.
E)producers' tendency of increasing supply when they observe a fall in prices.

Question

Quizplus · Accepted Answer

The misperception theory suggests that producers might increase supply when they perceive an increase in the general price level, mistakenly believing that the prices of their specific products have risen in comparison to others, leading to an upward-sloping short-run aggregate supply curve.

One Explanation for an Upward-Sloping Short-Run Aggregate Supply Curve Is