Movement Along a Supply Curve - Online Tutor, Practice Problems & Exam Prep

Understanding supply involves recognizing that a change in price results in a movement along the supply curve, indicating a change in quantity supplied, not a shift in the curve itself. Factors that shift supply include changes in production costs or technology, leading to a new supply curve. An increase in supply shifts the curve to the right, while a decrease shifts it to the left. This distinction between quantity supplied and supply is crucial for analyzing market dynamics and achieving market equilibrium.

Shifting Supply - Warning!

So in the same manner that we were shifting demand, now we're going to find the factors that shift supply. So again, I have this warning here, right, that a change in price does not shift the supply curve, right? It's already a variable on our graph, right? Our axes are price and quantity, so price changes are not going to make us draw a new supply curve. So let's go ahead and move into this box and we'll do an example. So a change in price. When we see a change in price, what's going to happen? We have our supply curve here, our price, and our quantity axes. Right? And let's say we started at this price right here in the middle. That was our original price and our original quantity. So original price \( p_1 \), our original quantity \( q_1 \), and now let's say that the price of the product decreased. Right? So now we're going to be at this price right here or excuse me this price down here \( p_2 \) and let's see what happens. So notice the price changed. We're not drawing a new graph, a new line, we're just moving along the supply curve that's already there, right? So the quantity is going to decrease just like the law of supply tells us because the price decreased, right? We're staying on the same line, just moved to the left there on the line. Cool.

So let's compare that to when other determinants of supply change right. When we have some of the factors that are going to shift the graph. So, let me get out of the way here and let's do an example of a supply shift. So if we're going to shift the graph, let's say some factor causes a good thing to happen in supply and we're going to shift the graph to the right, we would draw a new line parallel to the one that's already there and that is going to be our new supply. So where this was supply 1, this is supply 2 over here, right, and we have effectively shifted to the right in this situation. So when notice that when we have a change in price, what we're going to have is an increase or a decrease in the quantity supplied. Right. This goes hand in hand with our discussion about quantity demanded versus demand. This is quantity supplied versus a change in supply here on the right hand side, right. So when we draw a new line, it's as if we do we have a change in supply. When we're just moving along the line because of a change in price, it's a change in quantity supplied, right. And I have these notes about all else equal, all else not equal, just like with demand, right. We're holding everything equal when we do our analysis. So when we just have a change in price, pretty simple. Everything's equal except for that change in price. We're holding all else equal and over here we're still holding all else equal, it's just that this one factor change. So if nothing else changes except this one factor, what's going to happen? Well, we're going to shift the line like this. Cool? Alright. Let's finish up this page on the next video.

Here’s what students ask on this topic:

What causes a movement along the supply curve?

A movement along the supply curve is caused by a change in the price of the good or service. When the price increases, the quantity supplied increases, and when the price decreases, the quantity supplied decreases. This movement is represented by a shift from one point to another on the same supply curve, indicating a change in quantity supplied, not a shift in the supply curve itself.

How does a change in price affect the supply curve?

A change in price does not shift the supply curve; instead, it results in a movement along the supply curve. If the price of a good increases, suppliers are willing to produce and sell more, leading to a movement up the supply curve. Conversely, if the price decreases, the quantity supplied decreases, leading to a movement down the supply curve. The supply curve itself remains unchanged.

What is the difference between a movement along the supply curve and a shift in the supply curve?

A movement along the supply curve occurs when there is a change in the price of the good, leading to a change in the quantity supplied. This is represented by a movement from one point to another on the same supply curve. A shift in the supply curve, however, occurs when there is a change in other factors such as production costs, technology, or number of suppliers. This results in a new supply curve being drawn, either to the right (increase in supply) or to the left (decrease in supply).

What factors can cause the supply curve to shift?

Several factors can cause the supply curve to shift, including changes in production costs, technological advancements, number of suppliers, expectations of future prices, and government policies such as taxes and subsidies. An increase in supply shifts the supply curve to the right, while a decrease in supply shifts it to the left. These shifts indicate a change in supply, not just a change in quantity supplied.

How do you distinguish between a change in quantity supplied and a change in supply?

A change in quantity supplied is a movement along the supply curve due to a change in the price of the good. It reflects how much more or less of the good is supplied at different prices. A change in supply, on the other hand, is a shift of the entire supply curve due to changes in factors other than the price of the good, such as production costs or technology. This shift indicates a new relationship between price and quantity supplied.