the difference between change in supply and change in quantity supplied
Post on 23-Dec-2015
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The difference between
Change in Supply and change in
Quantity Supplied
A change in price creates
Movement from point a to point b
SLIDE
• Movement from point a to point b
is a slide “on or along” the supply curve,
resulting only from a change in price
• This is not a change in supply!!!!!!!!!
– only a change in quantity supplied because of a price change
Remember “Ceteris Paribus”
Let’s change one of the conditions which we held constant when we
established the original supply schedule for Greebes – these variables
are referred to as the non-price determinants of supply
A change in the Non-price DETERMINANTS OF SUPPLY
• – results in a shift in the Supply Curve
• CHANGES THE QUANTITY SUPPLIED AT EACH AND EVERY PRICE
What does a Change in Supplylook like?
A SHIFT or new supply curve
Review Time!!!!I told you this would be hard…
Compare 2000 with 2001. Which of the following statements is (are) true?
Year Quantity Sold Price2000 30,000 $10.2001 50,000 $20.I. Demand has increasedII. Quantity demanded has increasedIII. Supply has increasedIV. Quantity supplied has increasedV. Supply has decreased
A. I onlyB. V onlyC. I and IV onlyD. I and V onlyE. I, II and III only
Gotcha!
• Quantity demanded only increases or decreases by sliding along the demand curve
• When there is a change in demand, there is a new quantity demanded at each and every price
• The correct answer is C
Non-price Determinants of Supply:
Factors that shift the Supply Curve
“ROTTEN”
“R” is for resource
Changes in resource prices or input costs
Elements of nature and political disruptions
“O” is for otherChange in Prices of
other goods produced and
offered for sale
“T” is for technology
Changes in technology
“T” is for taxes
Changes in taxes and subsidies
“E” is for expectations
Change in expected future prices, (producer)
expectations
“N” is for number
Change in the number of suppliers in the market
Elements of nature and political disruptions
Non-price DETERMINANTS OF SUPPLY
• Changes in resource prices or input costs– Elements of nature and political disruptions
• Change in Prices of other goods produced and offered for sale
• Changes in technology• Changes in taxes and subsidies• Change in Expected future prices (producer)
expectations• Change in the number of suppliers in the market
– Elements of nature and political disruptions
Quick tip
Any factor that increases the cost of production decreases supply
Any factor that decreases the cost of production increases supply
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