In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve.
1 answer:
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Answer: f. Supply of manufactured houses shifts leftward and manufactured houses increase in price
Explanation:
All else being equal, when the price of an input into the production process increases, it makes producing the goods in question more expensive and so producers will respond by reducing production levels to maintain Profitability.
As the price of cement rises, making manufactured houses becomes more expensive and so the makers of manufactured houses will reduce the number of manufactured houses they make. This will reduce Supply thereby shifting the Supply Curve to the left. The new Equilibrium level will indicate a higher Equilibrium price as shown in the attached graph.
