Which of the following explains the shape of the short-run aggregate supply curve?
A)The inverse relationship between the quantity supplied and the cost per
B)The direct relationship between the quantity supplied and the cost per unit
C)The direct relationship between the quantity supplied and the price level
D)The inverse relationship between quantity supplied and GDP
E)The inverse relationship between quantity supplied and the profit per unit

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve is upward sloping, indicating a direct relationship between the quantity of goods and services supplied and the price level. This relationship exists because, in the short run, as prices for final goods and services rise, the prices of inputs (like labor and raw materials) tend to rise more slowly, leading to higher profits and an increase in the quantity supplied.

Which of the Following Explains the Shape of the Short-Run