Answer to Question #57010 in Macroeconomics for HS

Question

I'm a little bit confused. Isn't the short run defined as the period during which factor prices are fixed? Then how come that wages (a factor of production) will change in the short run and cause shifts of the SRAS curve?

Answer 1

In the short run some factor prices may be fixed, but not all of them. Usually in the short run capital inputs are fixed, but labor is variable and can be changed. And only in the long run all factors of production are variable. That's why wages as a factor of production will change in the short run and cause shifts of the SRAS curve.