The characteristics of AS — Edexcel A-Level Economics A
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The characteristics of AS explained
A movement along the AS curve occurs when the price level changes and all other influences on supply are held constant.
Read the full explanation
A rise in the price level causes an extension of aggregate supply; a fall causes a contraction. A shift of the AS curve occurs when a determinant other than the price level changes, such as wage rates, raw material prices, indirect taxes, subsidies, productivity or the availability of factors of production. A rightward shift means more output is supplied at every price level; a leftward shift means less. For example, a rise in oil prices shifts short-run AS left, raising the price level and lowering real output, whereas a fall in the price level moves the economy down along a given AS curve.
Your focus
- Distinguish between a movement along the AS curve and a shift of the AS curve.
- Explain the causes of a movement along the AS curve and the causes of a shift.
- Apply the distinction to a real-world example and show the effect on equilibrium price level and real output.
The characteristics of AS exam tips
Marking Points
- Defines a movement along the AS curve as a change in the quantity of aggregate supply caused solely by a change in the price level, ceteris paribus.
- Defines a shift of the AS curve as a change in aggregate supply at every price level caused by a change in a determinant other than the price level.
- Identifies determinants that shift AS: wage rates, raw material prices, indirect taxes, subsidies, productivity and factor availability.
- Explains the direction of shift: rightward for a fall in costs or rise in productivity, leftward for a rise in costs or fall in productivity.
- Applies a concrete example, such as a rise in oil prices shifting short-run AS left and raising the price level while lowering real output.
Examiner Tips
- 💡In multiple-choice questions, check whether the cause is a change in the price level or a change in another determinant; this determines movement versus shift.
- 💡When explaining a shift, state the determinant and the direction of the shift, and link it to the effect on equilibrium price level and real output.
- 💡Use a diagram to show the difference: an arrow along the curve for a movement, and a new curve for a shift.
- 💡Avoid saying 'the AS curve moves' when you mean a shift; use precise language such as 'the AS curve shifts right' or 'there is a movement along the AS curve'.
Common Mistakes
- Misunderstanding: a change in the price level shifts the AS curve. Correction: a change in the price level causes a movement along the AS curve; only a change in a determinant of supply shifts it.
- Misunderstanding: a rise in the price level is called an increase in aggregate supply. Correction: it is an extension of aggregate supply, shown as a movement up along the curve, not a shift.
- Misunderstanding: a change in costs shifts the AS curve but does not affect the price level. Correction: a shift in AS changes the equilibrium price level and real output, which can then cause a movement along the new AS curve if the price level changes.
- Misunderstanding: a movement along the AS curve can be caused by a change in productivity. Correction: productivity is a determinant of supply, so a change in productivity shifts the AS curve rather than moving along it.