Aggregate supply in the short run, Macroeconomics

Assignment Help:

Aggregate Supply in the Short Run

Production takes place in business sector on the basis of an expected price for its output. However, costs are incurred in anticipation of sales. This is the risk of production since firms cannot know in advance how much this output will sell for. If the actual price achieved exceeds the expected price, firms will experience a higher than anticipated level of profits and this will encourage an increase in production. This implies that the short run AS curve slopes upward from left to right for part of its range because at any point in time there is a limit on the output of goods and services. This limit increases as with increased production, the availability of idle resources decreases and this 'limit' is reached when the production reaches full employment level of output. When the resources available are fully employed the short run aggregate curve will become vertical. At this point, further increases in price level will have no effect on output.

 


Related Discussions:- Aggregate supply in the short run

Indian economic, What can be the topic to make assignment on indian macro e...

What can be the topic to make assignment on indian macro economics

Short-run framework, What is the difference between the short-run framework...

What is the difference between the short-run framework and the long-run framework? Discuss how each relates to supply and demand.

Positive and normative economics, POSITIVE AND NORMATIVE ECONOMICS E...

POSITIVE AND NORMATIVE ECONOMICS Economics as a social science adopts an analytical approach to the study of changes in economic variables on the actions of human beings. Th

Measurement of national income, what are the two precautions required while...

what are the two precautions required while estimating national income by value added method?

Difference between project proposal and project feasibility , Project feasi...

Project feasibility study is needed to make a decision whether the project proposal is technically and economically possible. After finalization of the project feasibility report b

Iterated elimination of dominated strategies, 1. Consider the following gam...

1. Consider the following game: a) Does either player have a dominant strategy? b) Does either player have a (pure) prudent strategy? c) Does the game have a saddlepo

Money, determinants of money supply

determinants of money supply

First investment yields a gain, An investor has a choice of 2 investment op...

An investor has a choice of 2 investment opportunities. The first investment yields a gain of $2800 with probability of 0.37, a gain of $1100 with probability of 0.27, and otherwis

Illustrate diffrent types of interest rates, Q. Illustrate diffrent types o...

Q. Illustrate diffrent types of interest rates? There are many other interest rates in a society. For instance, you will earn interest when you deposit money in a bank account

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd