Because some resource prices are assumed to be constant in the short run,
A)the aggregate supply curve is horizontal in the short run
B)the aggregate supply curve is vertical in the short run
C)costs do not increase as much as output prices do when the price level rises
D)an increase in price per unit is the same thing as a decrease in profit per unit
E)firms' total costs of production decrease as output increases

Question

Quizplus · Accepted Answer

In the short run, some resource prices are fixed, so when the price level rises, output prices increase more than costs, leading to higher profits and encouraging firms to increase output.

Because Some Resource Prices Are Assumed to Be Constant in the Short