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Table of Contents

  1. Topic pack - Microeconomics - introduction
  2. 1.1 Competitive Markets: Demand and Supply
  3. 1.1 Competitive Markets: Demand and Supply - notes
    1. The nature of markets
    2. Types of markets
    3. Market structure
    4. Spectrum of competition
    5. Demand
    6. The law of demand
    7. Individual and market demand
    8. Non-price determinants of demand
    9. Movements along the demand curve
    10. Shifts in the demand curve
    11. Example - shifts and movements along a demand curve
    12. Exceptions to the normal law of demand
    13. Linear demand functions
    14. Linear demand functions - example
    15. The law of supply
    16. Non-price determinants of supply
    17. Movements along the supply curve
    18. Shifts in the supply curve
    19. Shifts and moves of supply curve
    20. The real supply curve?
    21. Linear supply functions
    22. Linear supply functions - example
    23. Market equilibrium
    24. Market equilibrium - notes
    25. Excess demand and excess supply
    26. Example 1 - the market for DVD players
    27. Example 2 - the market for fish
    28. Applications of demand and supply
    29. Calculating market equilibrium
    30. Calculating equilibrium - example
    31. Scarcity and choice
    32. Choice and opportunity cost
    33. Price signalling
    34. Market efficiency - consumer surplus
    35. Market efficiency - producer surplus
    36. Allocative efficiency
  4. 1.1 Competitive markets - questions
  5. 1.1 Competitive markets - simulations and activities
  6. 1.2 Elasticities
  7. 1.2 Elasticities - notes
  8. Section 1.2 Elasticities - questions
  9. Section 1.2 Elasticities - simulations and activities
  10. 1.3 Government intervention
  11. 1.3 Government Intervention - notes
  12. 1.3 Government intervention - questions
  13. 1.3 Government intervention - simulations and activities
  14. 1.4 Market failure
  15. 1.4 Market failure - notes
  16. Section 1.4 Market failure - questions
  17. Section 1.4 Market failure - simulations and activities
  18. 1.5 Theory of the firm
  19. 1.5 Theory of the firm - notes (HL only)
  20. Section 1.5 Theory of the firm - questions
  21. Section 1.5 Theory of the firm - simulations and activities
  22. Print View

Shifts and moves of supply curve

You must be absolutely certain about what causes shifts along or movements of a supply curve. Work carefully through the following example.


Example 1

The diagram below, Figure 1, represents the supply of a product (X) at a point in time. The price then was P1 and the quantity supplied Q1.


Figure 1 The supply of Product X

Copy this onto another piece of paper, then sketch on this new diagram the effect of the following changes. Treat each change as a separate change - in other words start each time from Figure 1. Once you have had a go at each one then follow the link below to check you got the change right.

(a) Market price of the product falls from P1 to P2.

Answer - part (a)

(b) The government passes new minimum wage legislation, which will have the effect of increasing the cost of labour to the firm (an increase in costs of production).

Answer - part (b)

(c) The government places a tax on the sale of the product.

Answer - part (c)

(d) A new and highly efficient production process has been developed for a good.

Answer - part (d)

(e) Producers in a market can easily produce two products - chocolate chip cookies and chocolate coated cookies. The market for chocolate coated cookies has considerably declined. Producers decide to supply more chocolate chip cookies to the market instead.

Answer - part (e)

This should not be too difficult if you keep calm. Ask yourself three questions:

  • Has a ceteris paribus factor changed - in which case the curve will shift?
  • Will supply increase or decrease?
  • If price has changed will there be an extension or contraction of demand?