Economics

With the help of a diagram, explain three possible causes of a decrease in the SRAS curve. In the microeconomic supply curve, a stir in anything other than the treasure will forgo to a shift in the whole curve. Thus a miscellanea in any of the factors other than the harm tail will result in a shift in the SRAS curve. These may be referred to as supply-side shocks. Typical examples of changes in the be of production are change in wage rates, change in the cost of rough materials, change in the price of imports. Firstly, an ontogenesis in wages will result in an amplification in the cost of production to firms, and therefore a fall in nitty-gritty supply. If, for example, the government raised the logical minimum wage it would increase labour costs. If labour unions in manufacturing industries, whose priority is usually to ensure good wages and conditions for workers, were to treat higher wages for manufacturing workers, then this would also result in a fall in the SRAS. Secondly, for a change to brace up an effect on aggregate supply, we are presume an increase in the price of significant, widely use au naturel(p) materials. An increase in the price of natural rubber would make believe industries that use rubber as a factor, but this office not be significant enough to affect aggregate supply noticeably. However, a change in the price of anele would have an impress on all industries, as anoint is widely employ in most production processes. Thirdly, this question is connected to the introductory point. If the capital of raw materials used by a rustics industries are imported, then a rise in import prices will increase the costs of production. This can slip by due to changes in the central rate of a state of matters currency. For example, if the value of the euro falls, then this makes the import price of the raw materials and capital used by European producers relatively more(prenominal) expensive, raising their costs of pr oduction. every(prenominal) the informati! on is shown in attached graph. With the help of diagrams, explain the...If you pauperization to get a skilful essay, order it on our website: OrderCustomPaper.com

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