The short-run aggregate supply curve slopes upward because quantity supplied
A)increases when cost per unit falls
B)decreases when cost per unit falls
C)increases when the price level increases
D)increases when GDP decreases
E)decreases as profit per unit increases

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve shows the relationship between the price level and the quantity of goods and services that firms are willing and able to supply in the short run. As the price level increases, firms can earn higher profits, and they are willing to increase their output to meet the higher demand for their goods and services. As a result, the quantity supplied increases along the short-run aggregate supply curve.

The Short-Run Aggregate Supply Curve Slopes Upward Because Quantity Supplied