Why does the short-run aggregate supply curve slope upward?
What will be an ideal response?
The short-run aggregate supply curve slopes upward because as the prices of final goods and services rise, the prices of inputs rise more slowly. The higher price level increases profits and the willingness of firms to supply more goods and services. A secondary reason the SRAS slopes upward is that, as the price level rises, some firms are slow to adjust their prices. A firm that raises its prices slowly when the price level increases may find that its sales increase and therefore will increase production.
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The figure above shows the market for coffee. If the efficient quantity of coffee is produced, the producer surplus is
A) $10 million. B) $20 million. C) $60 million. D) zero.
The oldest hamburger chain in the United States is White Castle, which was founded in 1921 . Most of their restaurants in the early days were located in urban areas. In the 1950s they lost much of their business to McDonalds and Burger King
They were slow to respond in building restaurants on highways and in suburbs. How did the advent of the highway system in the 1950s alter residential location patterns and how might this have affected the marginal revenue product of burger chains in both urban and suburban areas. Why did sales drop off in the urban areas where White Castle had earned its initial success?
The price charged by a perfectly competitive firm is determined by
a. each individual firm b. a group of firms acting together as a cartel c. market demand and market supply d. the firm's total costs alone e. the firm's average variable cost
Before entering, fixed cost associated with the industry in question are sunk costs for
A) the incumbent firm. B) the outside firm. C) both firms. D) neither firm.