# Change in Supply

Document Sample

```					             Supply
Change in Supply or Change in Quantity
Supplied
Objectives
1. Understand the difference between a
∆QS and ∆S.
2. List the reason for a change in QS.
3. Identify the non-price determinants of
supply.
4. Graph a ∆QS and ∆S.
Profit is what motivates
producers.
Change in QS

Caused by a
change in the price
of the item. This is
shown by a
movement along
the curve.
Change in QS
P
P1                       S1

P2

Q2       Q1
Q
Change in Supply
• If something other than the price changes,
we call that a change in supply.
• Our original supply curve is no longer valid,
so we will shift the entire curve.
• There are several reasons for a change in
supply.
S2
S1
\$               S1   \$
S2

Q                       Q
Decrease in Supply       Increase in Supply
- Shift Left            - Shift Right
Change in Supply
1.   Change in government regulations
2.   Change in producer expectations
3.   Change in taxes or subsidies
4.   Change in # of sellers
5.   Change in cost of inputs
6.   Change in technology
7.   Change in other goods’ price
1. Change in Government
Regulations
1. Change in government regulations – This is
when the government tells the producer
they must do something.

Example: Tells auto manufacturers they
must have seat belts or air bags in all cars
2. Change in Producer
Expectations
2. Change in producer expectations – This
can be an expectation about price or some
other factor that would influence the cost of
production or the ability of the producer to
produce the item.

Example: If producers think the cost of one of
their inputs may decrease in the future, they
will wait to produce the item.
3. Change in Taxes or Subsidies
3. Change in taxes – Taxes on producers
raise the cost of production and cut into a
producers profit, so a new tax will decrease
supply.
Change in subsidies – A subsidy is when the
government pays the producer some
money. This, in essence, lowers the cost of
production and will cause an increase in
supply.
4. Change in cost of inputs
4. Change in costs of inputs – An increase
in the cost of an inputs will cause profit to
decrease so producers will supply less or
shift left; a decrease in the cost of an inputs
means the producer will get more profit, and
they will then increase supply or shift the
curve right.
5. Change in technology
5. Change in technology – New
technology allows a producer to lower the
cost of production and will always shift the
supply curve to the right with an increase.
6. Change in other goods’ prices
6. Change in prices of other goods- This is
other goods that have the same productive
process that a producer could produce.

Example: If you are a farmer (producer) and
you are producing wheat but the price of corn
at market is going to be higher than wheat, you
will stop producing wheat and start producing
corn.
7. Change in # of sellers
7. Change in # of sellers – If more sellers or
producers enter the market, supply will
increase and shift right; if sellers leave the
market for some reason, supply will decrease
and shift left.
remember these reasons.
•   T- ∆ technology
•   I- ∆ input costs
•   G- ∆ government regulations
•   G- ∆ other goods
•   E- ∆ expectations
•   R- ∆ taxes or subsidies
•   S- ∆ # of sellers

```
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 views: 4 posted: 11/6/2012 language: English pages: 16
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