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NotesEconomicsTopic 2.2Determinants of supply
Back to Economics Topics
2.2.210 min read

Determinants of supply

IB Economics · Unit 2

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Contents

  1. 1What shifts the supply curve
  2. 2Seven things that shift supply
  3. 3A supply shift moves the price
  4. 4Drawing it in the exam
  5. 5Exam-style question

Picture the strawberry growers near your town. Two different things can happen.

Scenario 1: the price changes

1

The price changes

Only the price of strawberries changes. Nothing else.

Price change
2

Producers move along S

They offer more at a higher price on the same curve S.

Along S

Our example (made-up numbers)

PriceBoxes offered
€420
€640
€860

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Scenario 2: something else changes

1

Wages for strawberry pickers fall

The price stays at €6, but producing costs less.

Not the price
2

The whole curve shifts

More is offered at every price: S1 moves right to S2.

Shift right

Our example (made-up numbers)

PriceBoxes offered beforeBoxes offered after
€64060
€42040

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Remember it as: Own price: slide along. Anything else: shift.

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Seven things other than the price shift the whole supply curve.

What shifts the supply of strawberries

1

Costs of production fall

Wages for pickers fall, so each box costs less to produce.

Shifts right →
2

Price of a good in competitive supply rises

Raspberries sell for more, so growers plant raspberries instead.

← Shifts left
3

An indirect tax is added

A tax on every box raises each grower's costs.

← Shifts left
4

A subsidy is paid

The government pays growers for every box, so costs fall.

Shifts right →
5

Prices expected to rise

Growers expect €4 a box next week instead of €3, so they keep some boxes in cold storage to sell then: fewer are offered today.

← Shifts left
6

Technology improves

New greenhouses grow more strawberries from each field.

Shifts right →
7

Number of firms rises

New growers start up nearby, so more boxes are offered.

Shifts right →

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The points to remember

  • Each one shifts supply at every price.
  • Most work through costs.

Seen in texts: all cut supply

1

A shock

A storm, flood or strike.

S left
2

Imported inputs cost more

A tariff or a weaker currency.

S left
3

New regulations

Safety or pollution rules.

S left

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A shift in supply moves the price. More offered at every price pushes the price down.

What happens to the price, step by step

1

Supply rises

Because of the new greenhouses, producers now offer 60 boxes at €6, not 40.

S1 to S2
2

A surplus

Buyers still want only 40 at €6, so 20 boxes are left unsold.

60 v 40
3

The price falls

Sellers cut the price to €5, where 50 boxes are bought and sold.

€6 to €5

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The points to remember

  • Supply rises: a surplus at the old price, so the price falls and quantity rises.
  • Supply falls: a shortage at the old price, so the price rises.

Quick reminder

  • Curves: D, S1 and S2 (S2 to the right)
  • Marks: P1, P2, Q1 and Q2
  • Dots with dashed lines to the axes, an arrow for the shift
  • No numbers, no title

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Paper 1 asked this in November 2025, as part (a) for 10 marks.

IB-style questionExplain[10 marks]

Explain two non-price determinants that could increase the market supply of a good.

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What the diagram must show

  • Both axes labelled: Price (P) and Quantity (Q).
  • The curve before the change: S1.
  • The new curve S2, to the right of S1, with an arrow.
  • Q1 → Q2 at the same price P1.
  • In your writing, say S1 shifts right to S2 and why.

How the 10 marks are given

MarksWhat your answer needs
9–10Both parts fully explained, terms used correctly all the way through, the diagram included and fully explained
7–8Both parts explained, terms mostly right, the diagram included and explained
5–6Partly explained, some terms, the diagram included
6 at mostOnly one of the two parts answered, however good it is

IB Exam Questions on Determinants of supply

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How Determinants of supply Appears in IB Exams

Examiners use specific command terms when asking about this topic. Here's what to expect:

  • Define

    Give the precise meaning of key terms related to Determinants of supply.

    AO1
  • Describe

    Give a detailed account of processes or features in Determinants of supply.

    AO2
  • Explain

    Give reasons WHY — cause and effect within Determinants of supply.

    AO3
  • Evaluate

    Weigh strengths AND limitations of approaches in Determinants of supply.

    AO3
  • Discuss

    Present arguments FOR and AGAINST with a balanced conclusion.

    AO3

See the full IB Command Terms guide

Related Economics Topics

Continue learning with these related topics from the same unit:

2.1.1The law of demand2.1.2Determinants of demand2.1.3Substitutes and complements2.1.4Movements vs shifts of demand
View all Economics topics
Improve your exam techniqueCommand terms, paper structure, and mark-scheme tips for Economics
Previous2.2.1The law of supplyNextMovements vs shifts of supply2.2.3

19 questions to test your understanding

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