Name ___________________________________Date________________________period_____
Economics
CHANGE IN SUPPLY AND SUPPLY SHIFTERS
Read Section 5.5. Answer the questions and complete a row in the matrix for each of the six supply shifters
(determinants) described in Section 5.5. Change in cost of inputs has been completed for you.
1. What is a change in supply?
2. What is a supply shifter?
3. Why is a change in supply not the same as a change in quantity supplied?
Supply Shifter
How the supply shifter influences the supply curve
Changes in the
cost of inputs
(factors of
production)
As the cost of production increases because the cost of
inputs/factors of production has gone up, then it becomes more
expensive to produce that good or service, so supply will
decrease. This will shift the supply curve to the left.
Change in the
number of
producers in the
marketplace
Changes in
conditions due to
natural disasters
or international
events
~1~
Sketch what happens to the
supply curve if the shifter
increases
Supply Shifter
How the supply shifter influences the supply curve
Sketch what happens to the
supply curve if the shifter
increases
Changes in
technology
Changes in
producer
expectations
Changes in
government
policy
Graph supply now if producers
expect the price to rise in the
future.
Subsidies:
Graph an increase in either
taxes or regulations.
Taxes:
Regulations:
4. What is the relationship between supply shifters and changes in supply?
5. If only the price for a good or service changes, does the supply curve shift? Why or why not?
6. Which of the supply shifters will usually cause supply to shift in only one direction? Why?
~2~
Name _______________________________________________Date_____________________period_____
Directions:
Read each headline below and determine the effect this headline would have on the supply for overall
market place OR for the good or service indicated. Draw a supply curve that reflects that change and list
which supply shifter (if any) is at play.
5. Typhoon Hits Alaska – Extensive Damage to Fishing
Vessels
What effect does this have on the supply of fish?
1. War in the Middle East Causes Oil Prices to
Skyrocket
What effect does this have on the supply of gasoline?
Shifter:
Shifter:
2. Engineer Invents Faster Way to Make Computer
Chips
What effect does this have on the supply of computer
chips?
6. House Prices More Expensive for Second Year in a
Row
What effect does this have on the supply of houses?
Shifter:
Shifter:
3. New Book Store Opens in Shopping Mall
What effect does this have on the supply of books?
7. Price of Cotton Falls
What effect does this have on the supply of t-shirts?
Shifter:
4. Damage to Panama Canal Will Slow Coffee
Imports Next Month
What effect does this have on the supply of coffee now?
Shifter:
Shifter:
8. Government Announces Tax Breaks on Production of
Fuel Efficient Cars
What effect does this have on the supply of fuel efficient
cars?
Shifter:
~3~
Name _________________________________Date________________________period_____
REASONS FOR CHANGES IN SUPPLY
Objective:
To understand what drives changes in supply and how that is different from changes in quantity supplied.
Directions:
Using the graph below, begin at curve C. Read each newspaper headline and decide if the event will
cause a change in supply of cars. Fill in the blank with ‘increase’ ‘decrease’ or ‘no change’ then indicate
which curve you will move to from the curve you are currently on. Move only one curve at a time. Indicate
which supply shifter is at work when appropriate.
Price (P)
A
B
C
D
E
A
Supply of cars produced in the US (Q)
1. Auto Workers’ Union Agrees to Wage and Benefits Cuts
Supply _____________ Curve _______ Determinant/Shifter _____________________
2. New Robot Technology Increases Efficiency
Supply _____________ Curve _______ Determinant/Shifter _____________________
3. Nationwide Auto Strike Began at Midnight
Supply ______________ Curve _______ Determinant/Shifter _____________________
4. Cost of Steel Rises
Supply ______________ Curve ______ Determinant/Shifter _____________________
5. Auto Producer Goes Bankrupt, Closes Operation
Supply ______________ Curve _______ Determinant/Shifter ____________________
6. Buyers Reject New Models
Supply ______________ Curve ______ Determinant/Shifter _________________
~4~