AP Notes, Outlines, Study Guides, Vocabulary, Practice Exams and more!

AS-AD Equilibrium in Short, Medium Run

short run - behaves simply, equilibrium at intersection of 2 curves  

  • natural level of output (Yn) doesn't come into play in short run
  • equilibrium at instantaneous intersection of AS and AD relations

medium run - shift back to natural level of production  

  • over time, AS adjusts to go back to natural level of output
  • in this case, output too high >> price higher than expected price
  • firms will raise their expected price over time, until AS relation shifts to where the intersection is at Yn

 

  • in this case, output too low >> price lower than expected
  • firms will lower their expected price until AS relation shifts down to where intersection is at Yn
  • important to note that change expected price doesn't shift the AD relation
Subject: 
Economics
Subject X2: 
Economics

Need Help?

We hope your visit has been a productive one. If you're having any problems, or would like to give some feedback, we'd love to hear from you.

For general help, questions, and suggestions, try our dedicated support forums.

If you need to contact the Course-Notes.Org web experience team, please use our contact form.

Need Notes?

While we strive to provide the most comprehensive notes for as many high school textbooks as possible, there are certainly going to be some that we miss. Drop us a note and let us know which textbooks you need. Be sure to include which edition of the textbook you are using! If we see enough demand, we'll do whatever we can to get those notes up on the site for you!