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Chapter 3: Problem 2

What is the difference between a change in supply and a change in quantity supplied?

Short Answer

Expert verified
A change in supply involves a shift in the supply curve due to non-price factors and results in a new supply curve. But a change in quantity supplied is a movement along the same supply curve due to changes in prices only.

Step by step solution

01

Definition of a Change in Supply

A change in supply refers to a shift of the supply curve due to reasons other than price change. Factors such as production costs, technology, and seller expectations can cause this. The outcome is a new supply curve.
02

Definition of Change in Quantity Supplied

A change in quantity supplied refers to a movement along the same supply curve due to price variations. Here, the supplier makes changes in the quantity of the good provided because of price fluctuations. The supply curve remains the same.
03

Comparison of the Two

While a change in supply involves shifting of the entire supply curve and is caused by factors other than price change, a change in quantity supplied is a movement along the same supply curve and arises only due to variations in price.

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Most popular questions from this chapter

Years ago, an apple producer argued that the United States should enact a tariff, or a tax, on imports of bananas. His reasoning was that "the enormous imports of cheap bananas into the United States tend to curtail the domestic consumption of fresh fruits produced in the United States." a. Was the apple producer assuming that apples and bananas are substitutes or complements? Briefly explain. b. If a tariff on bananas acts as an increase in the cost of supplying bananas in the United States, use two demand and supply graphs to show the effects of the apple producer's proposal. One graph should show the effect on the banana market in the United States, and the other graph should show the effect on the apple market in the United States. Be sure to label the change in equilibrium price and quantity in each market and any shifts in the demand and supply curves.

What is the law of supply? What are the main variables that cause a supply curve to shift? Give an example of each.

[Related to Solved Problem 3.4 on page 94] According to one observer of the lobster market: "After Labor Day, when the vacationers have gone home, the lobstermen usually have a month or more of good fishing conditions, except for the occasional hurricane." Use a demand and supply graph to explain whether lobster prices are likely to be higher or lower during the fall than during the summer.

In recent years, a number of cities have passed taxes on carbonated sodas to help reduce obesity and raise tax revenues. An article in the New York Times observed, "With that public momentum, a soda tax may be coming to a city near you." If this forecast is correct, what will be the effect on the demand for premium bottled water? Briefly explain. Source: Anahad O'Connor and Margot Sanger-Katz, “As Soda Taxes Gain Wider Acceptance, Your Bottle May Be Next," New York Times, November 26, 2016.

A news story from 2017 about the oil market stated, "crude oil prices fell ... in part [due to] renewed concerns about the global supply glut." a. What does the article mean by a "glut"? What does a glut imply about the quantity demanded of oil relative to the quantity supplied? b. What would be the effect of the glut on oil prices? c. Briefly explain what would make the glut start to shrink.
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