The aggregate supply curve
A) is the sum of the individual supply curves in the economy.
B) is a market supply curve.
C) embodies the same logic that lies behind an individual firm's supply curve.
D) relates output with the price level.

Question

Quizplus · Accepted Answer

The aggregate supply curve shows the relationship between the overall level of output in the economy and the price level, just as an individual firm's supply curve shows the relationship between its output and the price it receives. It is not simply the sum of individual supply curves, as some firms may respond differently to changes in prices or other economic conditions. It is also not a market supply curve, which shows the relationship between the quantity supplied by all firms in the market and the market price.

The Aggregate Supply Curve