- Shift in supply
- A shift in supply means a change in the quantity supplied at every price.
- Movement along the supply curve
- A movement along the supply curve is the change in quantity supplied caused by a change in the good's own price.
Factors that shift supply
Can you name the six factors that shift supply?
Each changes what it costs, or what it pays, to produce the good.
The cost of inputs is what a firm pays for labour, materials and machinery; a rise cuts profit at every selling price.
Can you think of an example?
Steel, an important ingredient in cars, gets dearer, so manufacturers supply fewer cars at every price.
Natural conditions are the weather, climate and natural disasters that change what it costs to grow or extract a product.
Can you think of an example?
A severe drought cuts the wheat harvest, so less is supplied at every price. Especially good weather does the reverse.
Technology is the methods used to turn inputs into output; an improvement lowers the cost of each unit, so a greater quantity is supplied at every price.
Can you think of an example?
Improved seeds bred for wheat and rice gave harvests twice as high per acre where farmers used them, shifting the supply of both crops right.
Taxes and regulations are costs a government places on producers, such as a duty on each unit or rules they must pay to meet.
Can you think of an example?
A duty on each bottle of wine, or a rule that factories fit cleaner equipment, raises costs, so less is supplied at every price.
A subsidy is a government payment to a firm, or a cut in its taxes, for carrying out certain actions, which lowers its costs.
Can you think of an example?
If the government pays bus operators for each rural route they run, each service costs them less, so more are supplied at every price.
The prices of related goods in production are those of goods made with the same resources, or made alongside this one, which change what supplying this good is worth.
Can you think of an example?
Dearer wheat leads farmers to plant wheat instead of barley, so barley supply shifts left. Dearer beef means more cattle are raised, so more leather is supplied at every price.