Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.If productivity increased such that 3,000 units are now produced with the quantity of inputs still equal to 60, then per-unit production costs would
A)decrease and aggregate supply would decrease.
B)decrease and aggregate supply would increase.
C)increase and aggregate supply would decrease.
D)remain unchanged and aggregate supply would remain unchanged.

Question

Quizplus · Accepted Answer

Productivity increase means more output with the same input, reducing per-unit production costs, which typically leads to an increase in aggregate supply.

Suppose That an Economy Produces 2,400 Units of Output, Employing