Go To Page
Demand Demand-Supply-SupplyShift.gif pg-1

A movement along the supply curve is the result of a change in the market price and is a change in desired quantity supplied. A change in any other factor which affects supply behavior leads to a change in supply, shifting the supply curve. We will focus on three factors which cause supply curves to shift: changes in production costs, changes in the market price of other items produced by the firm and entry and exit of other firms. The first two shift the individual supply curve of the firm in question. The third factor, entry and exit of other firms, shifts the market supply curve, but not the individual supply curves of the firms in the industry.

When the supply curve shifts or supply changes a completely new supply relationship replaces the previous supply curve. Different quantities will be supplied at every market price.

back forward

Copyright © 1995-2005 OnLineTexts.com, Inc. - All Rights Reserved