Question
This is a graph showing price and total output in the short and long run.
A graph has total economic output on the x-axis, and price on the y-axis. A vertical line represents the supply in the long run, and a line that curves upwards represents the supply in the short run. The lines intersect at a point.
According to this graph, how does supply behave in the short run and long run?
Output remains constant.
Output increases.
Output cannot be predicted.
Output reacts differently.
A graph has total economic output on the x-axis, and price on the y-axis. A vertical line represents the supply in the long run, and a line that curves upwards represents the supply in the short run. The lines intersect at a point.
According to this graph, how does supply behave in the short run and long run?
Output remains constant.
Output increases.
Output cannot be predicted.
Output reacts differently.
Answers
GPT-4o mini
Based on the description of the graph, it appears you are dealing with typical short-run and long-run supply dynamics in economics.
In the short run, the supply curve is upward sloping, indicating that as the price increases, the quantity supplied also increases. This is because producers are willing to supply more at higher prices to cover their variable costs and maximize profits.
In the long run, the supply curve is vertical, suggesting that the total economic output remains constant regardless of price. This is often because, in the long run, firms can enter or exit the market, and all factors of production can be adjusted. Therefore, the long-run supply reflects a situation where the market reaches a long-term equilibrium, balancing supply and demand at a given output level.
Given these behaviors, the best answer to your question is:
**Output reacts differently.**
This highlights the difference in how supply responds to price changes in the short run compared to the long run.
In the short run, the supply curve is upward sloping, indicating that as the price increases, the quantity supplied also increases. This is because producers are willing to supply more at higher prices to cover their variable costs and maximize profits.
In the long run, the supply curve is vertical, suggesting that the total economic output remains constant regardless of price. This is often because, in the long run, firms can enter or exit the market, and all factors of production can be adjusted. Therefore, the long-run supply reflects a situation where the market reaches a long-term equilibrium, balancing supply and demand at a given output level.
Given these behaviors, the best answer to your question is:
**Output reacts differently.**
This highlights the difference in how supply responds to price changes in the short run compared to the long run.