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 tipAny factor that increases the cost of production decreases supply

Any factor that decreases the cost of production increases supply