When we talk about short-run and long-run aggregate supply, it's important to know how they are different. Let’s break it down simply:

1. Flexibility of Prices:

• Short-Run Aggregate Supply (SRAS):

  • In the short run, prices and wages don’t change much.
  • For example, if more people want to buy something, companies can make more of it right away without increasing workers' pay right away. This means that they can quickly produce more.

• Long-Run Aggregate Supply (LRAS):

  • In the long run, prices and wages can change freely.
  • Over time, if demand changes, the economy adjusts by changing prices rather than how much is produced.

2. Capacity Utilization:

• SRAS:

  • Companies can increase output by using what they already have more effectively.
  • Imagine running a machine for longer hours without spending a lot of money on new equipment.

• LRAS:

  • This shows the economy’s highest possible output when all resources are being used fully.
  • For instance, if the economy is working at full capacity, then if demand goes up, prices will just rise instead of output increasing.

3. Time Frame:

• SRAS:

  • This looks at short-term changes in the economy, which can be from months to a few years.

• LRAS:

  • This shows long-term growth and what the economy can produce over several years.

In summary, SRAS reacts to quick changes, while LRAS shows the overall potential of the economy.