Supply — Edexcel A-Level Economics A
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Supply explained
A supply curve shows the quantity producers plan to sell at each price, other conditions of supply held constant.
Read the full explanation
A movement along the curve is caused only by a change in the good's own price: a rise in price raises quantity supplied, shown as a movement up the existing curve; a fall lowers it. A shift of the curve occurs when a condition of supply changes, so a different quantity is supplied at every price. For example, if the market price of chocolate bars rises, producers move along their supply curve to offer more; if a new tax on cocoa is imposed, the whole chocolate supply curve shifts left. The distinction matters because only own-price changes cause movements, while non-price factors cause shifts.
Your focus
- Distinguish between a movement along a supply curve and a shift of a supply curve.
- Identify whether a given change in a market causes a movement along or a shift of the supply curve.
- Explain, using a supply diagram, how a movement along and a shift of the supply curve are shown.
Supply exam tips
Marking Points
- A movement along a supply curve is caused by a change in the price of the good or service itself, with all other conditions of supply unchanged.
- A movement along the curve shows a change in quantity supplied: a price rise causes an upward movement (extension), and a price fall causes a downward movement (contraction).
- A shift of a supply curve is caused by a change in a condition of supply, such as costs of production, technology, taxes or subsidies, or the number of firms.
- A shift means a different quantity is supplied at every price; a rightward shift is an increase in supply and a leftward shift is a decrease in supply.
- On a diagram, a movement is shown by a point-to-point change on the same curve, while a shift is shown by drawing a new curve.
Examiner Tips
- 💡Read the stem carefully: if the change is the good's own price, choose the movement-along option; if it is any other supply condition, choose the shift option.
- 💡Sketch a quick supply diagram beside the question and mark whether the change is a point-to-point move on one curve or a new curve.
- 💡Eliminate options that confuse extension/contraction with increase/decrease in supply, because these terms are not interchangeable.
Common Mistakes
- Misunderstanding: any price change shifts the supply curve. Correction: a change in the good's own price causes a movement along the existing supply curve, not a shift.
- Misunderstanding: a change in costs of production causes a movement along the supply curve. Correction: costs are a condition of supply, so a change in costs shifts the whole supply curve.
- Misunderstanding: a leftward shift is a fall in quantity supplied along the curve. Correction: a leftward shift is a decrease in supply at every price, shown by a new curve, not a movement along the original one.
- Misunderstanding: a movement along the curve and a shift are the same because both change quantity. Correction: a movement is a response to own price only; a shift is a response to a non-price condition of supply.