In: Economics
under what circumstances can the supply curve shift up
or down
Sol :
Shift in supply curve occurs when there is a change (i.e increase or decrease) in the supply due to any reason other than change in own prices of the goods.
When there is a change in own prices of the goods there is a upward or downward movement along the supply curve.
When there is increase in prices of the own commodity , supplier will induce to increase the supply as to make higher profits.
So, there will be upward movement when prices increases.
When there is decrease in prices of own commodity, supplier will tend to reduce the supply because of less profits.
So, there will be downward movement when prices decreases.
Shift in supply curve due to any of the following reason :
Rightward Shift (increase in Supply)
Leftward shift (Decrease in supply)