Chapter 18, Problem 1MCQ

To determine

The correct option which shifts the short-run aggregate supply curve

Answer to Problem 1MCQ

From the available options, the correct option is all of the above.

Explanation of Solution

As short-run aggregate supply curve represents the relationship between the price level and the quantity supplied in the short run period where many production costs are considered as fixed costs, therefore, the supply curve shifts due to the change in these factors such as price of the good, capital stock, natural resources, technology, wages to labor, and profit at different price levels. Large capital stock, natural resources, and advancement in technology would increase the supply of goods in the market. And, obsolete technology, low capital stock, less profits, and shortage of natural resources would decrease the quantity supplied in market.

Here, the correct option is e (all of the above) as changes in all factors are responsible to shift the supply curve in the short-run.

Economics Concept Introduction

Introduction: An aggregate supply curve represents the relationship between the price level (aggregated) and the quantity supplied (aggregated) in the economy where aggregate supply is the total quantity which is produced and sell by firms at different prices in the market.