Author Question: A rightward shift in the aggregate supply curve is generally associated with a reduction in resource ... (Read 85 times)

stevenposner · **on:** Jun 30, 2018

A rightward shift in the aggregate supply curve is generally associated with a reduction in resource prices.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Darla is surprised to find that the quality of in-flight service remains much the same despite a steep hike in air-fares recently. What could be wrong in her assumption that a higher price naturally translates into better quality?

wuly · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

True

Answer to Question 2

The fact that two variables might be related does not necessarily mean that one causes the other to occur. Darla could be ignoring other variables involved in this scenario. Increase in fares might have been necessitated by factors such as increase in aviation fuel prices, margin pressures etc.