If profit per unit equals (price − cost per unit) and costs are temporarily fixed, then the aggregate supply curve will have
A)a basic "U" shape.
B)a negative slope.
C)a positive slope.
D)All of these responses are correct.

Question

Quizplus · Accepted Answer

A positive slope indicates that as the price of the product increases, the profit per unit also increases, leading to higher levels of production and supply. This relationship between price and quantity supplied is characteristic of the law of supply. A U-shaped curve does not accurately represent the relationship between price and quantity supplied, while a negative slope would suggest that as price increases, quantity supplied decreases, which is in contrast to the law of supply. Therefore, the correct answer is C.

If Profit Per Unit Equals (Price − Cost Per Unit)