Question

Discuss and illustrate graphically the difference between a change in quantity supplied and a change in supply.

8.         List and discuss the factors that shift supply. Illustrate graphically.

9.         Define, discuss and illustrate graphically equilibrium in the olive market. Define and illustrate graphically excess demand and excess supply.

Answer 1

Ans) 1) Quantity supplied is the amount supplied at any given price. While supply is the sum of all the amount supplied at different prices.

A change in quantity supplied will cause movement along the curve. An increase in quantity supplied will lead to an upward movement while a decrease in quantity supplied will lead to downward movement along the curve.

A change in supply will cause shift in supply curve. An increase in supply will cause rightward shift while a decrease in supply will cause leftward shift.

8) Factors causing shift in supply curve ÷

• Change in existing sellers ÷ an increase in number of sellers will increase the supply while a decrease in number of sellers will decrease the supply.
• Change in technology ÷ an advancement in technology will increase the supply while decrease in technology will decrease the supply.
• Change in price of raw materials ÷ an increase in price of raw materials will decrease the supply while a decrease in price of raw materials will increase the supply.

9) Equilibrium is point where quantity demanded is equal to quantity supplied. Price at this point is known as equilibrium price and quantity at this point is known as equilibrium quantity.

When price is below equilibrium price, there is shortage or excess quantity demanded. When price is above equilibrium price, there is surplus or excess quantity supplied.