The
short-run aggregate supply curve slopes upwards because businesses supply more due to the
increase in prices. Usually, firms are limited in the short-run because they can't expand their
premises or buy new machinery to cater for the increased supply needs; therefore, they produce
as much as they can using the available resources.
The long-run aggregate
supply curve doesn't curve, but becomes vertical to show the maturity of the market. Firms have
had enough time to adjust to the market conditions and are not easily affected by changes in
prices. Businesses want to maintain the same profit level, and cannot risk increasing the
quantity supplied due to competition. If they increase supply, others might do the same; leaving
them with more unsold goods despite spending on production.
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