Get premium membership and access questions with answers, video lessons as well as revision papers.

Explain what is shown by an economy’s short run aggregate supply curve.

      

Explain what is shown by an economy’s short run aggregate supply curve.

  

Answers


Lydia
The aggregate supply curve shows the quantity of goods and services that firms are willing to supply at each price level. In the short run it is assumed that the prices of factors of production remain unchanged so that an increase in the price of the finished product should increase profitability and cause firms to increase output.
The short run aggregate supply curve (SRAS) will be relatively elastic as increased output will only lead to slight increases in costs, perhaps due to lower productivity or the payment of overtime rates. Wage rates and other factor costs are unchanged.
lydiajane74 answered the question on July 4, 2018 at 20:08


Next: Evaluate the main policies which governments could use to reduce wage inequality.
Previous: Critically examine the policies which governments could adopt in order to shift the long run aggregate supply curve (LRAS) to the right.

View More Economics Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions