/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} 25 Briefly explain the reason for t... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 11: 25 (page 292)

Briefly explain the reason for the near-vertical shape of the SRAS curve on its far right.

Short Answer

Expert verified

When all resources are fully utilized, SRAS is vertical, indicating that the output has attained its maximum capacity.

Step by step solution

01

Concept introduction

The SRAS curve depicts the relationship between pricing and aggregate output.

02

Explanation

In the long run, SRAS approaches verticality because all of the economy's resources are fully utilized. The quantity of production cannot be increased more as all resources are fully utilized.

The economy is unable to produce any additional output due to a lack of resources. The resources have been fully exploited, and the output has reached its maximum potential. Even if prices rise, there is no way to boost output; only inflation is possible.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

How is pressure for inflationary price increases shown in an AD/AS model?

How is cyclical unemployment illustrated in an AD/AS model?

Briefly explain the reason for the near-horizontal shape of the SRAS curve on its far left.

On a microeconomic demand curve, a decrease in price causes an increase in quantity demanded because the product in question is now relatively less expensive than substitute products. Explain why aggregate demand does not increase for the same reason in response to a decrease in the aggregate price level. In other words, what causes total spending to increase if it is not because goods are now cheaper?

What is the neoclassical zone of the SRAS curve? How much is the output level likely to change in the neoclassical zone?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.