Answer:
Aggregate supply is the total amount of a specific good that is offered at each price.
- This means that, if price equals [tex]p_0[/tex], the total amount of the good that is offered to be sold at that price is [tex]q_0[/tex]. If price changes to [tex]p_1[/tex], this amount changes to [tex]q_1[/tex], and so.
- Then, for every posible price, there is a specific total amount of the good that will be offered at that price by producers.
- This relationship, between different prices and the amount of the good is offered at each price, is aggregate supply.
- It is expected that, the higher the price, the more quantities of goods are offered (if producers are offered a higher price is more attractive to offer goods).
Aggregate demand is the total amount of a specific good that is demanded at each price.
- This means that, if price equals [tex]p_0[/tex], the total amount of the good that is demanded to be bougth at that price is [tex]q_0[/tex]. If price changes to [tex]p_1[/tex], this amount changes to [tex]q_1[/tex], and so.
- Then, for every posible price, there is a specific total amount of the good that will be demanded at that price by consumers.
- This relationship, between different prices and the amount of the good is demanded at each price, is aggregate demand.
- It is expected that, the higher the price, the less quantities of goods are demanded (if consumers face a higher price, they will be discouraged to buy).
