Consider the basic AD/AS model.If their unit costs rise as output increases,price-taking firms will be prepared to produce ________ only if ________.
A)more; prices decrease
B)more; the economy is in equilibrium
C)their current output; prices increase
D)less; prices increase
E)more; prices increase

Question

Quizplus · Accepted Answer

In the AD/AS model, if unit costs rise with output, firms will only produce more if they can charge higher prices to cover the increased costs.

Consider the Basic AD/AS Model