Question

The​ short-run aggregate supply curve slopes upward because of all of the following reasons except

Answer 1

Answer:

B) in the short run, an unexpected change in the price of an important resource can change the cost to firms.

Explanation:

The short run aggregate supply (SRAS) curve is upward sloping because as the price of goods and services increases, the quantity supplied will increase. In the short run, wages are more sticky than prices, and businesses can adjust prices more rapidly than employees can get a raise. This will result in businesses increasing their profit margins as the general level of prices increases, therefore the SRAS curve will be upward sloping.

An unexpected change in the price of a key input will shift the entire SRAS curve either to the right (price of key input decreases) or to the left (price of key input increases).

Answer 2

Full Question:

The short-run aggregate supply curve slopes upward because of all of the following reasons except:

A. in the short run, prices of final goods and services adjust slowly due to the existence of menu costs.

B. in the short run, an unexpected change in the price of an important resource can change the cost to firms.

C. in the short run, as prices of final goods and services increase, input prices react more slowly.

D. in the short run, as prices of final goods and services increase, some firms are very slow to adjust their prices, thus their sales increase.

Answer:

The correct answer is B) In the short run, an unexpected change in the price of an important resource can change the cost to firms.

Explanation:

Aggregate supply is the total supply of goods and services that businesses in an economy plan to sell during a specific time period.                                      

The short-run aggregate supply curve is upward sloping because the quantity supplied increases when the price rises. In the short-run, firms have one fixed factor of production (usually capital ). When the curve shifts outward the output and real GDP increase at a given price. As a result, there is a positive correlation between the price level and output, which is shown on the short-run aggregate supply curve.

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