A manufacturing company decides to invest heavily in automation technology, which significantly increases its production capacity. How is this investment likely to affect the long-run aggregate supply (LRAS) in the economy?

When a manufacturing company invests in automation technology, it improves how efficiently it produces goods. This means the company can make more products without needing to hire as many workers or spend as much on resources. As a result, the overall ability of the economy to produce goods and services increases, which shifts the long-run aggregate supply (LRAS) curve to the right. For example, if a car manufacturer automates its assembly line, it can produce more cars at a lower cost, leading to an increase in the total output of cars in the economy. In the long run, this higher production capacity can lead to economic growth and potentially lower prices for consumers.