Some resource prices are assumed to be constant in the short run.How does this affect the shape of the short-run aggregate supply curve?
A) The aggregate supply curve is horizontal in the short run.
B) The aggregate supply curve is vertical in the short run.
C) The aggregate supply curve slopes upward in the short run.
D) The aggregate supply curve slopes downward in the short run.

Question

Some resource prices are assumed to be constant in the short run.How does this affect the shape of the short-run aggregate supply curve?  
A) The aggregate supply curve is horizontal in the short run. 
B) The aggregate supply curve is vertical in the short run. 
C) The aggregate supply curve slopes upward in the short run. 
D) The aggregate supply curve slopes downward in the short run.

Quizplus · Accepted Answer

The assumption that some resource prices are constant in the short run leads to an upward sloping short-run aggregate supply curve. This is because, with some input prices fixed, firms can increase output at increasing marginal costs, which translates into rising prices as output increases.

Some Resource Prices Are Assumed to Be Constant in the Short