Question

The aggregate supply curve represents:

a. ​the total quantity of a particular good that all producers are willing to supply at the equilibrium price level.

b. ​the total quantity of a particular good that all producers are willing to supply at each possible price level.

c. ​the quantity of aggregate output that producers are willing and able to supply at the equilibrium level of GDP.

d. ​the quantity of aggregate output that producers are willing and able to supply at each possible price level.

e. ​the quantity of aggregate output that producers are willing and able to supply at the equilibrium price level.

Answer 1

Option B.

• The aggregate supply curve represents the total quantity of a particular good that all producer's are willing to supply at each possible price level.
• When the price level of goods increase, the producers are willing to supply more of those goods as they will get higher returns from the sale.
• When the price they receive increases, they increase the total quantity of goods and services supplied.
• This will increase the quantity supplied and the aggregate supply curve shifts upwards to the right.
• Similarly when the prices decrease, the opposite occurs.