Why does the slope of the aggregate supply curve change from the short run to the long run?
What will be an ideal response?
In the short run, the aggregate supply curve is upward-sloping because rising prices cause profits to increase, and this induces producers to supply more output. In the long run, costs begin to rise along with the rising prices, and the profit incentive no longer exists. As a result, the long-run aggregate supply curve is vertical at the full-employment level of output.
You might also like to view...
The following table shows the relationship between the speed of a computer's CPU and its benefits and costs. Assume that all other features of the computer are the same (that is, CPU speed is the only source of variation), and only the CPU speeds listed below are available for purchase.CPUGHzTotal BenefitMarginal BenefitTotal CostsMarginal Costs2.0$1,000 $900 2.5$1,400 &1003.0 $300$1,200 3.5$1,900 &1,500 4.0$2,000 &400Application of the Cost-Benefit Principle would lead one to purchase a ________ computer.
A. 2.5GHz B. 2.0GHz C. 3.0GHz D. 4.0GHz
The Fed
A) distributes Federal Reserve notes, which are paper currency. B) is responsible for conducting U.S. fiscal policy. C) has 15 Federal Reserve banks and governing boards in New York and Chicago. D) is responsible for minting coins.
Money that is backed solely by a government decree is referred to as fiat money
a. True b. False Indicate whether the statement is true or false
The long-run supply curve under pure competition will be:
A. upsloping in an increasing-cost industry and vertical in a constant-cost industry. B. downsloping in a decreasing-cost industry and upsloping in an increasing-cost industry. C. horizontal in a constant-cost industry and downsloping in an increasing-cost industry. D. vertical in a constant-cost industry and upsloping in a decreasing-cost industry.