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| Topic: |
Business
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| Number of pages / Number of words: |
5 / 1364 |
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Because of imperfect information, changes in overall price level may be confused with changes in relative prices. This confusion has a bearing on decisions about supply quantity and is responsible for the upward sloping aggregate supply curve. If a producer finds that prices are higher than expected, they might conclude that prices of all the goods have increased...
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If a producer finds that prices are higher than expected, they might conclude that prices of all the goods have increased. In this case they might revise their estimate of general price level but they might not change their production/output. Alternatively, they might think that price of their product has increased so they might increase their production...
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