Question

Graphically illustrate the long-run aggregate supply curve. Explain how you derive this curve with at least 200 words.

Note:please explain in detail and please don't write HANDWRITING because I don t  understand your HANDWRITING

ITS my book : Principles of Economics (12th Edition)

Answer 1

In economics,aggregate supply is the total supply of goods and services that firms in a national economy plan to sell during a specific time period at a given price level.

Long-run aggregate supply curve

In the long-run ,only capital,labor, and technology affect the aggregate supply curve because at this point everything in the economy is assumed to be used optimally. The long-run aggregate supply curve is static because it shifts the slowest of the three ranges of the aggregate supply curve. The long-run aggregate supply is perfectly vertical,which reflects economists' belief that the changes in aggregate demand only cause a temporary change in an economy's total output. In the long run,there is exactly one quantity that will be supplied. The long-run aggregate supply curve can be shifted,when the factors of production change in quantity. Similarly,changes in technology can shift the curve by changing the potential output from the same amount of inputs in the long-term.The equation used to calculate the long-run aggregate supply is Y=Y*. In the equation,Y is the level of economic production and Y* is the natural level of production.

LONG-RUN AGGREGATE SUPPLY CURVE