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Describe the change in aggregate supply that should result from each of the following changes in determinants. Assume that nothing else is changing besides the identified change. (Use "Decrease" or "Increase.") (a) A rise in the average price of inputs; (b) An increase in worker productivity; (c) Government antipollution regulations become stricter; (d) A new subsidy program is enacted for new business investment in productive equipment; (e) Energy prices decline. (a) Decrease; (b) Increase; (c) Decrease (unless the increase in antipollution device production outweighs the decline in production caused by the increased cost of the regulations); (d) Increase; (e) Increase

Respuesta :

Parrain

Answer: Please refer to Explanation

Explanation:

(a) A rise in the average price of inputs

DECREASE because it is now less profitable for suppliers so they will produce less.

(b) An increase in worker productivity;

INCREASE because total cost is reduced as more goods are being produced per cost.

(c) Government antipollution regulations become stricter.

DECREASE (unless the increase in antipollution device production outweighs the decline in production caused by the increased cost of the regulations)

(d) A new subsidy program is enacted for new business investment in productive equipment.

INCREASE as the subsidy program will lower the cost of inputs so Suppliers will produce more goods.

(e) Energy prices decline.

INCREASE as there again would be Lower Input Costs thus pushing Suppliers to produce more.