Answer to Question #244025 in Microeconomics for Dilini

Question

Why long - run aggregate supply (AS) schedules are drawn vertically and short -run schedules are upward - sloping

Answer 1

Aggregate supply curve is upward sloping in the short-run because supply is considered as elastic in the market due to which producers make changes in their production decision in the short-run. In contrast, aggregate supply curve is vertical because it is assumed that an economy produce optimal output in the long-run due to which any change in price will not affect the Producers' supply decision and makes the supply Inelastic that, in turn, provides vertical AS curve.