The position of the vertical long-run AS curve represents the normal capacity level of output of the economy
The vertical long-run aggregate supply (LRAS) curve marks the maximum output an economy can sustain. It shows the point where all workers and resources are fully employed.
Real World
The UK economy in 2019 operated close to its LRAS — unemployment was at a 45-year low of 3.8%, meaning almost all available labour was in use and output could not expand further without inflation rising.
Exam Focus
Draw the LRAS as a perfectly vertical line at full-employment output; always label it Yf or Ye to secure diagram marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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