Short Run AS
Short Run AS
Courses Info
Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes
Short-Run Aggregate Supply
[diagram]
- Upward Sloping AS Curve – the Aggregate Supply curve is upward sloping in the Short Run, suggesting a positive relationship between price level and the quantity of goods / services.
- Capital is fixed – in the short term, the amount of capital remains the same
- SRAS is Elastic – firms are able to increase their output (or decrease if need be) by altering the hours and amount of work that employees do
Factors causing a shift in the SRAS
- Prices and costs of raw materials / commodities – the cheaper it costs to secure raw materials, the more that firms will be able to supply within their given budgets
- Levels of taxes or subsidies available to firms – if the amount of tax a firm has to pay rises, the amount of goods / services they are able to provide may decrease. On the other hand, if a firm has access to a subsidy, they may be able to use the extra funding to increase their supply
- Cost of labour (wages) – if the the wages paid to employees increase, firms will incur greater costs
- Change in Exchange Rates
Quick Fire Questions – Knowledge Check
1. Using a diagram, explain the characteristics of Aggregate Supply in the short-run (6 marks)
2. Identify and explain four factors causing a shift in the SRAS curve (8 marks)
Next Revision Topics
A Level Economics Past Papers