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Hi,
There are 3 ranges of the economy:
1. Keynsian (Nearly horizontal supply curve)
2. Intermediate
3. Classical (Upward Sloping supply curve)
The Keynsian part of the supply curve is horizontal because initially the economy is far from its full output level and the prices are sticky,the sellers are ready to sell the output at more or less the same prices. Their only aim is to generate revenue.
But the classical supply curve is upward sloping and almost asymptotic to the vertical line marking the full employment output level. Also,as the economy moves closer to the full output employment level,the prices increase much more however there is only a small change in the quantity supplied. In other words, as my resources will be nearing their full utilization, I will want to charge a higher price for the output.
This is what I understand.
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