Change In Supply


There are 6 determinants of supply that can cause a supply curve to shift to either the left or the right.





Government regulation, Taxes, and subsidies
Resource costs/ cost of production
Advances in Technology
Price of goods made with the same resources

Expectations about economic future
Sellers in the market




Increase in Supply

The supply curve shifted to the right. That means there was an INCREASE in supply. Equalibrium quantity INCREASED, while equilibrium price DECREASED.

equalSupplyShiftEXE.gif

Decrease in Supply

The supply curve shifted to the left. That means there was an DECREASE in supply. Equalibrium quantity DECREASED, while equilibrium price INCREASED.

equalExe2.gif

Practice

  1. Graph the affected supply curve for milk shakes if the FDA requires all milk shakes to be made with pasteurized milk. (Graph the original supply curve and the shifted supply curve)
  2. Graph the affected supply curve for state universities if the state government increases their budget and promotes increase in number of schools.(Graph the original supply curve and the shifted supply curve)
  3. Graph the affected supply curve for corn when the price of popcorn goes up. (Graph the original supply curve and the shifted supply curve)

Answers


external image decrsupplyeq.jpg
2.
external image incrsupplyeq.jpg
3.
.external image incrsupplyeq.jpg

Article

http://www.economist.com/blogs/freeexchange/2011/02/energy_prices

This article is about rising oil prices, and how oil is still cheap so many more rich Americans buy oil than do other rich people throughout the world. Since Americans can afford oil and it's cheaper, they will plan infrastructure, cars, and other products around oil instead of using other resources.

References

1. http://www7.esc.edu/fmendels/economics/equalText.htm
2. http://www.economist.com/blogs/freeexchange/2011/02/energy_prices