When each firm is producing at capacity and there is full employment, this shows:

Question

BlackTom AI · Accepted Answer

The long-run aggregate supply (LRAS) curve is vertical at the economy’s potential output, so when firms are producing at capacity and unemployment is at its natural rate, the economy is on the LRAS. 1. Relevant knowledge points and concepts - Potential (or full‑employment) output Y*: the level of real GDP when labor and capital are fully utilized and unemployment is at the natural rate. - Capacity production: firms operating at their sustainable maximum given current capital, technology, and labor. - Long‑run aggregate supply (LRAS): vertical at Y* because in the long run output depends on real factors (resources and technology), not the price level. - Inflationary gap: actual output > Y*. Deflationary (recessionary) gap: actual output < Y*. 2. Step‑by‑step reasoning Step 1: “Each firm producing at capacity” implies aggregate production equals the economy’s maximum sustainable output. Step 2: “Full employment” implies unemployment is at its natural rate and factors are fully utilized. Step 3: These two conditions jointly describe actual output = potential output (Y = Y*). Step 4: In aggregate demand/aggregate supply framework, the situation where Y = Y* corresponds to the economy being on the LRAS (the vertical curve showing potential output is independent of price level). 3. Intermediate steps/calculations No numeric calculations are required. Symbolically: capacity + full employment ⇒ Y = Y* ⇒ point lies on LRAS. 4. Why the correct answer is correct Because LRAS represents the output level when all resources are fully employed and firms operate at capacity. The price level does not determine this long‑run output. 5. Why other options are incorrect - Inflationary gap is wrong because that requires actual output > Y*, which contradicts “at capacity and full employment” (that is exactly Y*). - Deflationary gap is wrong because that requires actual output < Y*. - “All of the options” is wrong because both gap options cannot simultaneously describe full‑capacity, full‑employment output. 6. Conclusion Therefore the correct choice is "the long run AS curve", which matches the provided answer.

When each firm is producing at capacity and there is full employment, this shows:单项选择题

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