Question

The aggregate supply curve slopes a. downward because firms can sell more at lower prices. b. upward because firms can hire workers at fixed wages for short-run periods. c. upward because firms want to hire more workers at higher wage levels. d. downward because firms can hire more workers at lower prices.

Answer 1

Answer:

The correct option is (b)

Explanation:

Aggregate supply curve is upward sloping as output increase with the increase in price. In the short run, wage rate is fixed. As such, in the short run, firms can hire more workers at fixed wage rate. An increase in price indicates more profits, thereby increasing output.

This is the reason for upward sloping AS curve.