Shape Of The As Curve In The Short Run (Sras, Upward Sloping Line Or Sweeping Curve) And The Long Run
Economics notes
Shape Of The As Curve In The Short Run (Sras, Upward Sloping Line Or Sweeping Curve) And The Long Run
➡️ Changes in Aggregate Demand: Changes in aggregate demand, such as an increase in consumer spending or a decrease in government spending, can cause shifts in the aggregate supply curve. This is because an increase in demand will lead to an increase in production, while a decrease in demand will lead to a decrease in production.
➡️ Changes in Resource Prices: Changes in the prices of resources, such as labor, capital, and raw materials, can also cause shifts in the aggregate supply curve. An increase in resource prices will lead to an increase in production costs, which will cause firms to produce less and shift the aggregate supply curve to the left. Conversely, a decrease in resource prices will lead to a decrease in production costs, which will cause firms to produce more and shift the aggregate supply curve to the right.
➡️ Changes in Technology: Technological advances can also cause shifts in the aggregate supply curve. An increase in technology will lead to an increase in production efficiency, which will cause firms to produce more and shift the aggregate supply curve to the right. Conversely, a decrease in technology will lead to a decrease in production efficiency, which will cause firms to produce less and shift the aggregate supply curve to the left.
What is the difference between the short run and long run AS curve in economics?
The short run AS curve is upward sloping, indicating that as the price level increases, firms are willing to produce more output. However, in the long run, the AS curve becomes a vertical line, indicating that changes in the price level have no effect on the quantity of output produced.
Why does the short run AS curve slope upward?
The short run AS curve slopes upward because in the short run, firms have fixed costs and cannot easily adjust their production levels. As the price level increases, firms are willing to produce more output to take advantage of the higher prices and increase their profits.
What factors can shift the AS curve in the short run and long run?
In the short run, the AS curve can be shifted by changes in input prices, changes in technology, or changes in the level of government regulation. In the long run, the AS curve can be shifted by changes in the labor force, changes in capital stock, or changes in productivity.