Questions: ECON2006 James Pfister 01/18/25 11:23 PM Screens 2024-12... 16 Test: Final Exam This test: 72 point(s) possible This question: 1 point(s) possible Submit test Screens 2024-12... 4 The short-run aggregate supply curve slopes upward because of all of the following reasons except A. in the short run, prices of final goods and services adjust slowly due to the existence of menu costs. B. in the short run, as prices of final goods and services increase, input prices react more slowly. C. 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. D. in the short run, an unexpected change in the price of an important resource can change the cost to firms.

The answer is D

Menu costs refer to the costs associated with changing prices, such as reprinting menus or updating price lists. These costs can cause firms to adjust their prices slowly, contributing to the upward slope of the short-run aggregate supply (SRAS) curve. This is a valid reason for the upward slope.

This option describes the concept of sticky wages and prices, where input costs (like wages) do not immediately adjust to changes in the price level. This lag allows firms to increase production when the prices of final goods rise, contributing to the upward slope of the SRAS curve. This is a valid reason.

This option highlights the idea that some firms may not adjust their prices as quickly as others, leading to increased sales for those firms that maintain lower prices. This can incentivize increased production, contributing to the upward slope of the SRAS curve. This is a valid reason.

This option describes a supply shock, which can shift the SRAS curve but does not explain why the SRAS curve slopes upward. Instead, it refers to a shift in the curve itself, not the slope. Therefore, this is not a reason for the upward slope of the SRAS curve.