Macroeconomics
Movement along the curve: When there is a change in the price of a product while all otherfactors influencingsupplyremainconstant (ceterisparibus) ,itleadstoamovementalongthesupplycurve.This means producers are willing to sell more or less of the product at different price points. ● Adecreaseintheprice ofaproductreducesits quantitysupplied .Thisisreflectedby a downward movement along the supply curve known as a contraction of supply . ● Anincreaseinthepriceofaproductincreasesitsquantitysupplied.Thisisreflectedby an upward movement along the supply curve known as an extension of supply . Inthiscase,thereisachangein quantitysupplied whichisthespecifcamountofaproductorservice that producers are willing to sell at a particular price.
Shifts of the supply curve: Factors other than price (i.e., non-price factors) influencetheproduction decisions of sellers. Such factors shift the supply curve causing a change in supply (≠ quantity supplied). The factors that shift the supply curve are the following: ● Costs of production ● Price of related goods and services ● Expectations ● Number of producers in the market ● Technology ● Government policy Changes in these determinants that cause an increase in supply shift thesupplycurvetotheright (outwards) , whereas changes that cause a decrease in supply shift the supply curve to the left (inwards) .
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