Which of the following best describes the eclectic aggregate supply curve?
A) Horizontal until full employment is reached,and then it becomes vertical.
B) Vertical at all output levels.
C) First horizontal,then upward sloping,and finally vertical.
D) Downward sloping.

Question

Quizplus · Accepted Answer

The eclectic aggregate supply curve initially starts as horizontal when there are unused resources and a surplus of labor in the economy. However, as output increases, firms begin to experience difficulty in finding enough labor and other resources, causing the curve to slope upward. Finally, at full employment, the curve becomes vertical as output can only be increased by increasing prices, which firms are willing to do as long as the marginal revenue exceeds the marginal cost. Therefore, option C describes the eclectic aggregate supply curve the best.

Which of the Following Best Describes the Eclectic Aggregate Supply