QS Study

A shift of the supply curve caused by a change in one of the supply determinants. A  chow in supply is caused by any factor affecting supply except price. A related, but distinct, concept is a change in quantity supplied.

A change in supply is a change in the entire price-quantity relation that makes up the supply curve. It means that a different quantity supplied is paired with a given supply price or that a different supply price is paired with a given quantity supplied. The result of this repairing of prices and quantities is a re-positioning, or a shift, of the supply curve.

The five supply determinants (resource prices, production technology, other prices, sellers’ expectations, and number of sellers) are responsible for causing a Change in supply. In fact, the only thing that DOES NOT Cause a change in supply is the supply price.

Supply and Quantity Supplied

To set the stage for an understanding of this difference, take note of two related concepts:

  • Supply: Supply is the range of quantities that sellers are willing and able to sell at a range of supply. It is ALL points that make up a supply curve.
  • Quantity Supplied: Quantity supply is a specific quantity that sellers are willing and able to sell at a specific supply. It is but ONE point on a supply curve.

Making Changes

So what happens when the phrase “change in” is placed in front of each term?

  • Change in Supply: A change in supply is a change in the ENTIRE supply relation. This means changing, moving, and shifting the entire supply curve. The entire set of prices and quantities is changing. In other words, this is a shift of the supply curve. A change in supply is caused by a change in the five supply determinants.
  • Change in Quantity Supplied: A change in quantity supplied is a change from one price-quantity pair on an existing supply curve to a new price-quantity pair on the SAME supply curve. In other words, this is a movement along the supply curve. A change in quantity supplied is caused by a change in price.

Changing Supply

A change in supply is a shift of the supply curve. A change in quantity supplied is a movement along a given supply curve. These alternatives can be illustrated with the positively-sloped supply curve presented in this exhibit. This supply curve captures the specific one-to-one, law of supply relation between supply price and quantity supplied. The five supply determinants are assumed to remain constant with the construction of this supply curve.