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)their current output; prices increase
B)more; prices decrease
C)less; prices increase
D)more; prices increase
E)more; the economy is in equilibrium

Question

Quizplus · Accepted Answer

Price-taking firms will produce more only if prices increase to cover the rising unit costs associated with higher output levels.

Consider the Basic AD/AS Model