Title
Supply ShiftsCreator
Nikita Lyssenko, Memorial University of Newfoundland. Distance Education, Learning and Teaching Support (DELTS)Description
Normally new techniques of production will be accepted by suppliers only if they expand the production potential or reduce the costs associated with production. In general, production can be expected to expand at all prices when a new technology is adopted. This outward shift in the supply curve is illustrated in this figure. The quantity increases from Q0 to Q1, at the reference price P0, as a new technology is adopted. The supply curve shifts out at all the prices.
Another example of the shift in the supply curve is related to the factors of production. The change in prices that a company pays for the inputs (factors of production) such as energy, land, labour, and capital most likely will change the costs associated with the generation of output. These cost changes may be reflected in the quantities offered for sale at various prices. Higher costs will tend to reduce the quantity offered, which will shift the supply curve backward. Lower costs will tend to shift the supply curve outward.
Learning Design
Demonstrate an understanding of concepts of "demand" and "supply" and the determinants of "quantity demanded" and the "quantity supplied".Date Created
2013Format
Image/gif