Other Things Besides Price that Effects Short-Run Aggregate Supply
- Aggregate Price: This says that as price increases, the quantity supplied will also increase, indicating a positive relationship.
- Input Costs: If input costs such as wages increase, then SAS will decrease because the producers will decrease supply.
- Technology: As technology continues to improve, SAS will increase.
- Government Policy on Taxes: If business or corporate taxes are lowered, then SAS will increase.
- Investments: If investments were to increase, SAS will increase. On the other hand, if investmests were to fall, then SAS will decrease.
What all of these factors have in common is that any increase in input prices will decrease SAS and any decreases in input prices will increase production in the SAS. So, anything that is able to change the factor costs will be a shift factor of Short-Run Aggregate Supply.
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