Unformatted text preview: Aggregate Supply Equilibrium Analysis + If proﬁt rises (falls), more (less) output is produced. P : price at which output is sold
C (W , P M , r k ): cost of producing one unit of output
W : wage
P M : price of raw materials proﬁt = P − C (W , P M ) + The objective of ﬁrms is to maximize proﬁts; the quantity
supplied is determined by the proﬁt made on each unit output: Aggregate supply (AS) is the total quantity of goods and
services that ﬁrms want to sell at diﬀerent price levels. Aggregate Supply Aggregate Demand ...
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