Aggregate supply (AS)

Aggregate supply is described in an AD-AS model by the AS curve. The AS-curve is a straight line with a positive slope that describes the relationship between supply and price level when all other factors are held constant.

Aggregate supply is the total supply of products in a country. Aggregate supply depends on the price level, the aggregate supply is higher when prices are higher.

The AS curve has a positive slope because the marginal costs of companies increases with increasing volume and companies are only interested in selling more quantity of products when prices exceed the marginal cost.