4.3.9—AS shifts
- Syllabus
- 9708–2026–2027
- Objective
- 4.3.9
- Level
- AS
Costs move SRAS; capacity and productivity move LRAS
SRAS shifts when firms’ current costs change, such as wages, raw materials, taxes or energy prices. LRAS shifts when sustainable capacity changes through labour, capital, technology, skills or institutions.
A supply shock can move SRAS left without permanently reducing capacity; investment or productivity can shift LRAS right and may also shift SRAS.
A sudden oil-price rise shifts SRAS left; improved infrastructure and worker skills can shift LRAS right over time.
Not every short-run cost change changes long-run capacity, and an LRAS shift is not a movement along SRAS.
ConceptA-Level CAIE Economics AS