Pearson Edexcel · A-Level · Economics B
Course version: 9EB0 · Version from Sept 2015
D) The factors that may cause a shift in the supply curve: o changes in…
Full specification wording
Supply: d) The factors that may cause a shift in the supply curve: o changes in the costs of production o the introduction of new technology o indirect taxes o subsidies o changes in the number of firms in an industry o external shocks
A shift in the supply curve occurs when non-price factors alter the quantity supplied at every price.
Checked against the Pearson Edexcel 9EB0 specification (opens in a new tab) on .
- Point 4 of 4
- 4 key terms
Study notes
From the checked teaching notes for this specification point.
The idea
A shift in the supply curve occurs when non-price factors alter the quantity supplied at every price. An outward shift (right) means increased supply; an inward shift (left) means decreased supply. Changes in the costs of production, like rising wages, shift supply left as profitability falls. The introduction of new technology increases efficiency, shifting supply right. Government interventions matter: indirect taxes increase costs, shifting supply left, whereas subsidies lower costs, shifting supply right. Changes in the number of firms in an industry alter total market supply; new entrants shift the curve right. Finally, external shocks, such as extreme weather destroying crops, cause sudden shifts, usually leftward.
What earns the marks
- Identify that an increase in production costs shifts the supply curve to the left.
- Recognise that a subsidy reduces costs of production, shifting the supply curve to the right.
- Determine the impact of an indirect tax on the supply curve, noting it shifts the curve leftwards.
- Explain how external shocks, such as natural disasters, reduce market supply and shift the curve left.
Common mistakes and how to put them right
Confusing a movement along the supply curve with a shift.
Put it right: Movements are caused by price changes, while shifts are caused by non-price factors.
Assuming an indirect tax shifts the demand curve.
Put it right: Indirect taxes are levied on producers, increasing their costs and shifting the supply curve left.
Believing that a leftward shift is a 'downward' shift.
Put it right: A leftward shift represents a decrease in supply, which visually moves the curve up and to the left along the price axis.
Exam tips
- Always draw a quick sketch of the supply curve when answering questions about shifts to visualise the impact on price and quantity.
- Remember the acronym PINTSWC (Productivity, Indirect taxes, Number of firms, Technology, Subsidies, Weather/Shocks, Costs) to recall the factors shifting supply.
- Read carefully to distinguish between a subsidy, which shifts supply right, and a tax, which shifts supply left.
Try the lesson
The start of the Supply: d) The factors that may cause a shift in the supply curve: o changes in the costs of production o the introduction of new technology o indirect taxes o subsidies o changes in the number of firms in an industry o external shocks lesson, made from checked teaching notes for this specification point.
Have a go first
Which of the following factors is most likely to cause a rightward shift in the supply curve for a manufactured good?
Listen
A shift in the supply curve occurs when non-price factors alter the quantity supplied at every price. An outward shift (right) means increased supply; an inward shift (left) means decreased supply. Changes in the costs of production, like rising wages, shift supply left as profitability falls. The introduction of new technology increases efficiency, shifting supply right. Government interventions matter: indirect taxes increase costs, shifting supply left, whereas subsidies lower costs, shifting supply right. Changes in the number of firms in an industry alter total market supply; new entrants shift the curve right. Finally, external shocks, such as extreme weather destroying crops, cause sudden shifts, usually leftward. A strong answer earns marks for these points. Identify that an increase in production costs shifts the supply curve to the left. Recognise that a subsidy reduces costs of production, shifting the supply curve to the right. Determine the impact of an indirect tax on the supply curve, noting it shifts the curve leftwards. Explain how external shocks, such as natural disasters, reduce market supply and shift the curve left. A common slip: Confusing a movement along the supply curve with a shift. Instead, movements are caused by price changes, while shifts are caused by non-price factors. Exam tip: Always draw a quick sketch of the supply curve when answering questions about shifts to visualise the impact on price and quantity.
See it
Key words
Say what each word means before you turn the card.
Indirect taxes
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Subsidies
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External shocks
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Changes in the number of firms in an industry
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See every definition
- Indirect taxes
- These are levied on producers, increasing their costs and shifting the supply curve left.
- Subsidies
- These lower costs of production, shifting the supply curve to the right.
- External shocks
- Sudden events, such as extreme weather destroying crops, that cause the supply curve to shift, usually leftward.
- Changes in the number of firms in an industry
- New entrants alter total market supply and shift the supply curve right.
Label the diagram
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1Box 1
2Box 2
3Box 3
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