7 good questions and answers: "shift of the short run Aggregate supply curve"
- The SRAS curve is the relationship between the aggregate price level and the aggregate output supplied
- Because some of the production costs are fixed in the short run, a change in the aggregate price level leads to a change in the producers' profit of output and, in turn, leads to a change in profit maximizing level of aggregate supplied
- In perfectly competitive market, if the aggregate price level falls because many production costs are fixed in the short run production cost per unit of the output does not fall by the same proportion as the fall in the price of output
- so the profit declines leading PC producers to reduce the quantity supplied in the short run
- An fall in the price of a commodity
- decreases production cost across the economy
- so that increases the profitability of the producers
- so that increase the quantity of aggregate output supplied
- which shifts the AS curve to the right
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