-Refer to Figure 13.1. For a given stock of capital, supply of labour and state of technology, the long run supply curve is:

Question

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The long run supply curve is vertical at the level of potential output because it reflects the maximum amount of goods and services an economy can produce when it is most efficiently using all its resources (capital, labor, technology). It does not depend on the price level in the long run, indicating that changes in demand will not affect the total output in the long run, only the price level.