Question

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

a. 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.
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, prices of final goods and services adjust slowly due to existence of menu costs.

Answer 1

The short-run aggregate supply curve slopes upward due to input prices reacting slowly, prices of final goods and services adjusting slowly due to menu costs, and unexpected changes in the price of important resources affecting costs to firms.

Step-by-step explanation:

The short-run aggregate supply curve slopes upward because of several reasons:

1. in the short run, as prices of final goods and services increase, input prices react more slowly
2. in the short run, prices of final goods and services adjust slowly due to menu costs
3. in the short run, an unexpected change in the price of an important resource can change the cost to firms

However, the upward slope of the short-run aggregate supply curve does not occur as a result of some firms being slow to adjust their prices. Instead, it is primarily driven by the factors mentioned above.