Starting at long-run equilibrium, ceteris paribus, a decrease in the costs of widely used factors of production would most likely increase short-run aggregate supply.
<h3>What Is Equilibrium?</h3>
Prices must be stable due to a balance between market supply and demand. This is the state of equilibrium. As opposed to a shortage or undersupply, which raises prices and lowers demand, a surplus of goods or services typically results in lower pricing, which increases demand.
The equilibrium price is the one where supply and demand are balanced. The forces of supply and demand are essentially equal, and the market is in equilibrium when a major index experiences a period of consolidation or sideways movement. According to economists, price changes are typically close to the equilibrium values. Market dynamics will encourage sellers to enter if the price increases excessively.
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