Derive the long-run aggregate supply curve

Question

For a hypothetical economy, suppose the full employment level of real output (Q) will be $250 and the price level (P) firstly is 100. Employ the short-run aggregate supply schedules below to answer the questions that follow:

Demonstrate the circumstances explained in parts a and b on graph paper, and derive the long-run aggregate supply curve.

Answer 1

Short-run AS: P1 = 100; P2 = 125; P₃ = 75; and Q₁ = $250; Q₂ = $280; and Q₃ = $220. Long-run aggregate supply = Q₁ = $250 at each of the three price levels.