Question

how does the change in determination of supply reflect in the shift of supply curve? draw appropriate diagram.

Answer 1

changes in the determination of supply will reflect in the shift of supply curve.Supply curve will shift to left and to right.Supply is curve is shifted to left when supply decreases and supply curve shift to the right when supply increases.The change in non price factors will lead to an entire shift of the supply curve either to the left or to the right.Various such determinants of supply curve that causes a shift in the supply curve are changes in technology,the level of technology,government regulation ,prices of inputs etc..
The effect of each of these determinants on supply is explained below.

(I)Changes in technology of production:When there are technological advances in the economy it will cause the supply curve to shift to the right .The price or cost of production will decreases and the quantity demanded will also increases.

ii)The price of inputs or the cost of production: If the price of inputs increases the supply will decrease .When the price of inputs used for the production increases the cost of production will also increase and the sellers need to sell their goods for more money.As changes in input of production will cause will influence the cost of production and will cause a shift in the supply curve.The supply curve will shift inwards(left) when the cost of input increase and the supply curve will shift outward(right) when supply decreases.

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iii)Government regulations:Government policies and regulations also have an important impact on the supply curve.When the government introduces more regulation like taxes.When government introduces more regulation the firms cost of production increases and the supply decrease.

iv)Number of sellers in the market:When the number of sellers increases it will cause a right ward shift in the supply curve and reduction in number of sellers in market will shift the supply curve to the left.