3.6 behind the supply curve

• key factors influencing supply:

  • technology
  • input costs
  • government intervention
  • expectations
• Technology:

  • Advances in technology make production more efficient, shifting the supply curve to the right.
• Input Costs:

  • Lower input costs (wages, raw materials) shift the supply curve to the right, increasing the quantity supplied.
• Higher input costs shift the supply curve to the left, reducing the quantity supplied at each price.
• Government Intervention:

  • Regulations or taxes can reduce supply by making production more expensive, shifting the supply curve to the left.
• Subsidies, on the other hand, can shift the supply curve to the right by lowering production costs for suppliers.
• 1. Expectations:

  • If firms expect the price of their product to fall in the future, they may supply more today to avoid losses, affecting the current supply curve.
• the non price factors that shift the supply curve: PINTSWC

  Productivity

  Indirect Tax

  technology

  Subsidy

  Weather

  costs of production
• • Productivity : if output increases, costs reduce so supply increases 
• • Indirect Tax : if this increases, costs increases so supply decreases
• No. of firms : the more firms in the market, supply increases
• • Technology : improvement reduces costs of production & leads to supply increasing 
• • Subsidy : given / increased supply increases 
• • Weather : good weather allows supply to increase
• • Costs of Production 
  • Transport 
  • Labour 
  • Oil 
  • Raw materials 
  • Regulation 
  • Utilities 
• productivity, indirect tax, technology, subsidy, costs of production all directly affect supply.
• Movement Along the Curve: This occurs when price changes, and quantity demanded or supplied moves along the existing demand or supply curve.
• Shifts of the Curve: These happen when other determinants of demand or supply change, causing the entire curve to shift left or right.