a)because the quantity supplied increases when prices rise.
b)If the demand is high, then there are very few production processes that have unemployed fixed outputs. Any increase in demand production causes a rise in prices, resulting in an steep or vertical AS curve.
Explanation:
The aggregate supply curve represents the total value of the goods and services that firms want to produce and sell at each price level. Different period differences are important when investigating a comprehensive proposal. Short-term aggregate supply curve has a positive tendency. Long-term aggregate supply curve is assumed to be vertically. Because in the long run, aggregate supply depends on other factors, not price. Generally, the factors associated with the aggregate supply are:
1) Resource prices: It is impossible to imagine the production process without raw materials and other resources. Therefore, product manufacturers are investigating the prices of resources they will use. As the rise in commodity prices also raises costs for firms, the overall production of the enterprise and the macroeconomic level will be reduced.
2) Technology: Developments in technology enable businesses to operate more efficiently, produce more products and ultimately increase their supply.
3) Expectations: Firms are exploring both the production factors market (raw materials, labor, capital, etc.) as well as the market for the products they produce. If firms expect price increases in the future, they will reduce their present offerings to make higher offerings in the future. As cost increases the cost of raw materials and other manufacturing factors, firms' costs will increase and production will decline during that period. In other words, the expected increase in the future will reduce the aggregate supply in both cases
Short-term aggregate supply tends to be upward slope, because the quantity supplied increases when prices rise. In the short term, firms have a fixed production factor (usually capital). The real GDP increases at a certain price as the curve moves outward. As a result, there is a positive relationship or correlation between the price level and the output shown in the short-term supply chain curve.
The steep or flat slope of aggregate supply curve?
1) The flat slope: The AS curve is increasing because some nominal input prices are fixed in the short term and more output is faced with bottlenecks as output increases. At low demand, a large number of manufacturing processes do not fully utilize basic capital equipment. As a result, production can be increased with diminishing returns. There is no need to increase the average price level to justify increased production.
2) The steep slope: If the demand is high, then there are very few production processes that have unemployed fixed outputs. Any increase in demand production causes a rise in prices, resulting in an steep or vertical AS curve.
