How do short-run aggregate supply and long-run aggregate supply differ?

The distinction between short-run aggregate supply (SRAS) and long-run aggregate supply (LRAS) is fundamentally rooted in how each responds to changes in economic conditions and the concept of full employment.

In the short run, the aggregate supply curve is influenced by production costs, which can fluctuate due to various factors, such as changes in resource prices or temporary supply shocks. Businesses may react to these changes by adjusting output levels without necessarily changing their prices immediately, leading to a scenario where production may not occur at full capacity. Therefore, the short-run aggregate supply reflects a time frame where some prices are sticky or slow to adjust, and firms are still responding to changes in demand by adjusting output based on these temporary conditions.

In contrast, the long-run aggregate supply is considered to represent an economy operating at its full employment level, where all resources are fully utilized, and prices have had sufficient time to adjust. In this scenario, the economy is producing at its potential output, and the long-run aggregate supply curve is typically depicted as vertical because it reflects the idea that, in the long run, the total supply of goods and services is determined by factors such as technology, resources, and productivity, rather than the price level.

This understanding clarifies why the correct