IBonomicsShift of the Supply CurveSL
MicroeconomicsA diagram showing how the whole supply curve can shift to the right or left when a non-price determinant of supply changes.
Curves and elements
- supply
- Supply Curve (S): Shows the original relationship between price and quantity supplied.
- increase in supply
- Increase in Supply (S to S2): A rightward shift of the supply curve, meaning more is supplied at every price.
- decrease in supply
- Decrease in Supply (S to S1): A leftward shift of the supply curve, meaning less is supplied at every price.
- non price determinants
- Non-price Determinants: Factors other than the good’s own price that can shift the supply curve.
Key explanations
- 1
A shift of the supply curve occurs when quantity supplied changes at every price level.
- 2
An increase in supply shifts the supply curve to the right, from S to S2.
- 3
A decrease in supply shifts the supply curve to the left, from S to S1.
- 4
Supply can shift due to factors such as production costs, technology, taxes, subsidies, weather, expectations, or the number of producers.
Example exam question
Explain how a fall in production costs would affect the supply curve for a good.
Show example answer
A fall in production costs would increase supply, shifting the supply curve to the right from S to S2, all things being equal.
