13Chp22-Econ3310 - Aggregate Supply Equilibrium Analysis If...

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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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