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Pearson Edexcel IAL Economics 2.3.3.2a Factors influencing SRAS. Changes

Practise applying SRAS shifts to real contexts where raw material, energy, exchange-rate or tax changes alter firms' production costs.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • draw SRAS shifting left or right after coal, gas or oil price changes affect producers' costs
  • use AD/SRAS diagrams to show resulting changes in average price level and real output
  • explain how import prices, exchange rates or tax rates change SRAS through business costs

2.3.3.2a - Factors influencing SRAS. Changes in: (SRAS) • costs of raw materials and energy • question 1

[Maximum number: 4]

Between January 2014 and September 2020 the price of natural gas fell from $ 5.60 per cubic foot to $ 1.66 per cubic foot. Natural gas is an important source of energy for Japanese producers.

Draw a SRAS and AD diagram to show the effect of the decrease in the price of natural gas on the price level and real output for Japan.

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