Questions on supply
If the price of a product changes it will result in a new quantity supplied and a movement along the existing supply curve.
However, if another ‘determinant of supply’ changes it will result in a shift of the supply curve to a new position, to the right (an increase) or to the left (decrease).
In the following cases, draw an original supply curve (S) and a new supply curve to the left or right, and label it S1.
- The supply of economics textbooks following a fall in the cost of printing.
- Ice cream, following a rise in the cost of milk.
- Underground (metro) travel following a strike by train drivers.
- The world supply of oil following the discovery and refining of large oil reserves in Russia.
- The supply of wine from France following the imposition of a tax on imported wine.
- The supply of bread in an economy following the granting of a subsidy by the government to bread producers.