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A decrease in per unit production costs will shift the aggregate supply curve leftward.

A. true
B. false

1 Answer

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Final answer:

The statement is false; a decrease in per-unit production costs would lead to an increase in supply, thus shifting the aggregate supply curve to the right, not the left.

Step-by-step explanation:

The statement that a decrease in per-unit production costs will shift the aggregate supply curve leftward is false. In economics, aggregate supply (AS) represents the total supply of goods and services that firms in an economy are willing to produce at a given price level during a specific period.

When per-unit production costs fall, a business can supply more at every price since it becomes more profitable to produce goods. This corresponds to a movement of the aggregate supply curve to the right, indicating an increase in the total quantity supplied at any given price level. Conversely, an increase in per-unit production costs decreases profitability and likely results in a firm supplying a smaller quantity of goods at any given price level, causing the AS curve to shift to the left.

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