Question

Sort the following scenarios into whether the change in quantity described is caused by a shift in the supply curve or movement along a supply curve.

a. Increase in technology leading to more efficient production (Shift)
b. Increase in the price of raw materials (Shift)
c. Increase in quantity demanded due to a decrease in price (Movement)
d. Decrease in quantity supplied due to an increase in production costs (Movement)

Answer 1

An improvement in technology and an increase in the price of raw materials cause shifts in the supply curve, while an increase in quantity demanded due to a decrease in price and a decrease in quantity supplied due to an increase in production costs cause movements along the supply curve.

Step-by-step explanation:

a. An improvement in technology that reduces the cost of production will cause an increase in supply. This can be shown as a rightward shift in the supply curve.

b. An increase in the price of raw materials will cause a shift in the supply curve.

c. An increase in quantity demanded due to a decrease in price is a movement along the supply curve.

d. A decrease in quantity supplied due to an increase in production costs is a movement along the supply curve.