Re: Dse 2010 Q44

Posted by phelps.phan on Jun 18, 2014; 1:18pm
URL: http://discussion-forum.276.s1.nabble.com/Dse-2010-Q44-tp7592978p7593017.html

Ron, for very high P, since W/P=0 , Y=aK-bg. Y is not affected by P so it is vertical as price is in Y axis and output is in X axis.

(I'm not 100 percent sure abt the below)
When price is low ie. approx =0 it should produce infinite Y, however this can be considered as a maximum value(say Ymx) that Y attains when output is low. So for lower prices it produces Ymx just like for higher prices it produces Y=ak-bg. In both the cases it is a constant and does not vary with P, so the aggregate supply curve is vertical.