A Change In Supply And A Change In Quantity Supplied

In the same way that we distinguished between a change in demand and a change in the quantity demanded, we can distinguish between a change in supply and a change in the quantity supplied.

An increase in price will cause ...





An change in the price causes a movement along the supply curve.  An increase in price causes an upward movement along the supply curve.

A decrease in the cost of production will cause ...





A change in a non-price factor causes a shift of the supply curve.  A decrease in the cost of production implies that at every price, a higher quantity is supplied and the supply curve shifts to the right.

A change in price causes a change in quantity supplied and is represented as a movement along the supply curve

A change in non-price factors causes a change in supply and is represented as a shift of the supply curve.

Watch the following video clip about the differences between a change in quantity supplied and a change in quantity

Activity

Indicate whether the following statements are true or false:

An increase in the price of potatoes will result in an increase in the supply of potatoes (i.e. a rightward shift of the supply curve).



Think again.

An increase in the price of potatoes increases the quantity supplied and it is represented as an upward movement along the supply curve.  A rightward shift of the supply curve occurs if a non-price factors changes.

The statement is indeed false.

An increase in the price of potatoes increases the quantity supplied and it is represented as an upward movement along the supply curve.  A rightward shift of the supply curve occurs if a non-price factors changes.

A decrease in the price of potatoes will result in a downward movement along the supply curve (i.e. a decrease in the quantity of potatoes supplied).



A decrease in the price of potatoes will result in a downward movement along the supply curve (i.e. a decrease in the quantity of potatoes supplied).

Think again.

A decrease in the price of potatoes will result in a downward movement along the supply curve (i.e. a decrease in the quantity of potatoes supplied).

An upward movement along a supply curve is called an increase in supply.



Think again.

An increase in the price causes an increase in quantity supplied and is represented by an upward movement along the supply curve.

The statement is indeed false.

An increase in the price causes an increase in quantity supplied and is represented by an upward movement along the supply curve.

A change in the price of guavas will not cause the supply curve for guavas to shift.



The statement is indeed true.

A change in the price of guavas causes a movement along the supply curve for guavas. A change in a non-price factor shifts the supply curve.

Think again.

A change in the price of guavas causes a movement along the supply curve for guavas. A change in a non-price factor shifts the supply curve.

Choose the correct option to describe each of the diagrams below:

This diagram indicates…




Think again. An increase in price is an upward movement along the supply curve.

Think again.  An increase in the cost of production (input prices) causes a left ward shift of the supply curve.

Correct. This diagram shows a downward movement along the supply curve, which indicates a decrease in the price of the product.

Choose the correct option to describe each of the diagrams below:

This diagram indicates…




Think again. An increase in price is an upward movement along the supply curve.

Correct. An increase in the cost of production (input prices) causes a left ward shift of the supply curve.

Think again. A downward movement takes place if the price decreases.