Asked by Trinity Roberts on May 13, 2024
Verified
Which of the following is true if marginal costs increase at a slow rate as output increases?
A) The short-run aggregate supply curve is relatively steep.
B) The short-run aggregate supply curve becomes vertical.
C) The short-run aggregate supply curve is relatively flat.
D) The long-run aggregate supply curve becomes horizontal.
E) The long-run aggregate supply curve becomes downward sloping.
Marginal Costs
The additional cost incurred from producing one more unit of a good or service.
Aggregate Supply Curve
The aggregate supply curve represents the total output of goods and services that firms in an economy are willing and able to produce at different price levels, holding all else constant.
Output Increases
A rise in the quantity of goods or services produced by an economy or firm over a specific period.
- Describe the effect of costs associated with resources and production on shaping the slope of the short-run aggregate supply curve.
Verified Answer
GA
Ghader Al-AsadyMay 15, 2024
Final Answer :
C
Explanation :
If marginal costs increase at a slow rate as output increases, it means that there are still economies of scale present, and therefore the short-run aggregate supply curve is relatively flat. In the long run, the aggregate supply curve can still become horizontal due to further investment and technological improvements.
Learning Objectives
- Describe the effect of costs associated with resources and production on shaping the slope of the short-run aggregate supply curve.