👆 Movements Along the Supply Curve
The Rule: A movement along the supply curve happens when the price of the good itself changes. The curve stays in the same position — you just move to a different point on it.
How it works
- Price RISES → move UP and RIGHT along the curve → quantity supplied RISES
- Price FALLS → move DOWN and LEFT along the curve → quantity supplied FALLS
Notice this is the OPPOSITE direction to demand. For supply, price and quantity move in the SAME direction (both up or both down).
The correct term is a change in quantity supplied (not a 'change in supply'). Just like with demand, this wording matters for exam marks.
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↔️ Shifts of the Supply Curve
The Rule: A shift of the supply curve happens when a non-price factor changes (costs, technology, government policy, etc.). The entire curve moves to a new position.
Right shift (increase in supply)
- The whole curve moves to the RIGHT
- At every price, producers now supply MORE
- Caused by: lower costs, better technology, subsidies, more firms entering, good weather
Left shift (decrease in supply)
- The whole curve moves to the LEFT
- At every price, producers now supply LESS
- Caused by: higher costs, new taxes, stricter regulations, firms exiting, bad weather
The correct term is a change in supply (or 'increase/decrease in supply'). This means the whole curve shifted, not just a movement along it.
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🎯 Which Curve Shifted? The Exam Essential
In exam questions, you will often get a scenario and need to figure out which curve to shift. This is a critical skill that comes up in almost every paper.
Step 1: Identify the cause
Ask yourself: is the cause a demand-side factor or a supply-side factor?
- Demand-side: income, tastes, related goods, population, expectations → shift the DEMAND curve
- Supply-side: costs, technology, government policy, weather, number of firms → shift the SUPPLY curve
Step 2: Check the price-quantity pattern
If you are told what happened to both price and quantity, the pattern tells you which curve shifted:
- Price and quantity move in the SAME direction → DEMAND shifted (P↑ Q↑ means D shifted right; P↓ Q↓ means D shifted left)
- Price and quantity move in OPPOSITE directions → SUPPLY shifted (P↓ Q↑ means S shifted right; P↑ Q↓ means S shifted left)
A past paper asked students to explain a demand-side change that would reduce the price of wheat, and a supply-side change that would raise the price. For demand: lower income (if wheat is a normal good) shifts demand left → price falls. For supply: bad weather reduces harvest → supply shifts left → price rises.
Before drawing your diagram, pause and ask: (1) Is this a demand or supply factor? (2) Does it shift the curve right or left? Then draw, label, and explain the new equilibrium. This three-step process will keep you accurate under exam pressure.