Explain why the short-run supply curve is not vertical, but the long-run aggregate supply curve is vertical
Over the short run, suppliers are willing to supply more real output if the price level is increasing. This is due to the two possible explanations offered in the text: the profit effect and the misperception effect. The short-run aggregate supply curve is upward sloping, and responsive to the price level; the long-run aggregate curve is perfectly vertical and unresponsive to changes in the price level, as these two effects are absent in the long run.
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An indifference curve shows the baskets of goods which
a. have the same marginal values. b. the consumer can purchase, given his income and the prices he faces. c. are the most preferred of the baskets within his budget. d. are all equally desirable, providing the consumer with some fixed level of satisfaction.
Empiricism refers to the process of:
A) making choices using values and beliefs. B) measuring variables. C) testing ideas using data. D) collecting and organizing data.
Suppose the following: (1 ) the wage rate rises, (2 ) the interest rate rises, (3 ) any change in AD is greater than any change in SRAS. Based on this information, in the short run Real GDP will __________ and the price level will __________
A) rise; rise B) fall; rise C) fall; fall D) rise; fall
(Consider This) Children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. Which of the following conditions of price discrimination explains why this occurs?
A. The seller must have some monopoly power; that is, it must be able to set the product price. B. The seller must be able to identify buyers by group characteristics such as age or income. C. Groups must have different elasticities of demand for the product. D. The items can be bought by people in the low-price group and transferred to members of the high-price group.