Changes in Supply

Part I

Change in Supply

• A change of supply takes place when a new quantity is supplied at every price.– It is NOT the same as a CHANGE IN QUANTITY

SUPPLIED.

• An increase in supply means more is supplied at each price.– The curve shifts to the right.

• A decrease in supply means less is supplied at each price.– The curve shifts to the left.

New Supply Schedule(Increase in Supply)

Price per T-Shirt Original Number of T-Shirts Supplied

New Number of T-Shirts Supplied

$30 350 430

$27 330 406

$24 300 370

$21 240 298

$18 190 238

$15 140 178

$12 70 94

$9 20 34

$6 0 0

New Supply Curve(Increase in Supply)

0

5

1 0

1 5

2 0

2 5

3 0

3 5

0 5 0 1 0 0 1 5 0 2 0 0 2 5 0 3 0 0 3 5 0 4 0 0 4 5 0 5 0 0

Q u a n t i t y o f T - S h i r t s S u p p l i e d

Pri

ce p

er T

-Sh

irt

Comparison

Change in Supply

• New quantity at every price

• New supply schedule

• New supply curve

• Leads to a price change

Change in Quantity Supplied

• New quantity because of a new price

• Move within supply schedule

• Move along supply curve

• Follows a price change

Important Reminder!

• Whenever there is a new quantity supplied:– If the price has not yet changed, it is a

CHANGE IN SUPPLY.– If the price has changed, it is assumed to be a

CHANGE IN QUANTITY SUPPLIED.