Explain Why the Aggregate Supply Curve Is Flat in the Short

question 64

Essay

Explain why the aggregate supply curve is flat in the short run and steep in the long run.

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Definitions:

Residual Value

The estimated value that an asset will have at the end of its useful life.

Economic Life

The period over which an asset is expected to be productive or provide economic benefits.

Operating Lease

A lease agreement allowing a company to use an asset without ownership, with lease payments expensed as incurred.

Capital Leases

A lease agreement that grants the lessee almost all the risks and benefits of ownership of the asset leased.