In the short run,the aggregate supply curve has a positive slope because,as the price level rises,producers can
A)accumulate inventories.
B)charge a higher price sufficient to cover their higher unit costs.
C)experience rising factor prices.
D)produce less in response to falling profits.
E)increase output at unchanged unit costs.

Question

Quizplus · Accepted Answer

As the price level rises, producers can charge a higher price for their goods, which will cover their higher unit costs. This is because in the short run, some input prices (such as wages and raw material costs) are fixed, meaning that an increase in the price level will increase the cost of production. To maintain their profit margins, producers must increase the price at which they sell their goods.

In the Short Run,the Aggregate Supply Curve Has a Positive