Question

Explain the difference between a "change in supply” and a “change in quantity supplied.” What factors could cause each of these? Be sure to include a graphical illustration with your answer.

Answer 1

Change in supply takes place when the supply curve shifts towards the left or right because of various factors. When there is a change in supply, the quantity supplied at each price point changes. So, the supplier supplies more or fewer units of goods at each price point than earlier. Change in supply takes place because of various factors other than price. These factors include a change in the cost of production, change in the availability of factors of production, changes in supply chain conditions, etc. The following graph shows changes in supply. The supply curve shifts left or right to denote a change in supply.

The above graph shows demand curve D and initial supply curve S1. Supply curve shifts towards the right and become S2 when there is an increase in supply and shifts left to become S3 when there is a decrease in supply.

Change in quantity supplied happen when suppliers supply more because of an increase in price or supply less when there is a decrease in the price. Change in quantity supplied takes place only because of a change in the price. The following graph shows that quantity supplied increases from A to B when there is an increase in price and decreases from A to C when there is a fall in the price: