The slope of the aggregate supply curve increases as output increases because
A. the cost of resource use increases as potential is reached.
B. consumers are willing to pay more as output expands.
C. firms substitute capital for labor as prices increase.
D. firms substitute capital for labor as capacity is reached.
Answer: A
You might also like to view...
If goods A and B are complements, then
A) the cross elasticity of demand between A and B is negative. B) the cross elasticity of demand between A and B is positive. C) their income elasticities of demand are both greater than 1. D) their income elasticities of demand are both less than 1.
Assume the elasticity of of supply for a particular good has been estimated to equal 1.8. In this case, a 10 percent increase in product price would cause the quantity supplied to:
A) decrease by 1.8 percent. B) increase by 1.8 percent. C) decrease by 18 percent. D) increase by 18 percent.