An increase in SRAS shifts right, decrease shifts left


Per unit production cost= total input cost/total output

Determinants of SRAS
all affect unit produced
-input prices
-productivity
-legal institutionalized environment


Domestic Resources Prices
-Wages (75% of all business costs)
-Cost of capital
-Raw materials
Foreign Resources Prices
-Strong $= lower FRP
-Weak $= higher FRP

Market power
-Monopolies and canels that control resources, control the price of those resources.
Increase in resources prices= SRAS shift left
Decrease- shifts right.

Productivity= total output/total inputs

More productivity=lower init productivity cost= SRAS shift right

Lower productivity= higher unit production cost = SRAS shift left

Legal Institutional Environments
-Taxes and subsidies
-Taxes($ to gov't)
Increase per unit production cost= SRAS shifts left
-subsidies($ from gov't) to business reduce per unit production cost= SRAS shifts right.

Government Regulation
-Gov't Reg. creates a cost of compliance= SRAS shifts left
-Deregulation reduces compliance costs= SRAS