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Chapter 5: Problem 3

If supply increases, does the supply curve shift to the right or to the left?

Short Answer

Expert verified
If supply increases, the supply curve shifts to the right.

Step by step solution

01

Understanding the Supply Curve

The supply curve is a graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period of time. It slopes upwards, indicating that as price increases, the quantity supplied also increases.
02

Understanding Shifts in the Supply Curve

A shift in the supply curve is a change that starts at 0 and affects the entire quantity supplied at all price levels. It is caused by anything that changes supply except the price of the product. Increase or decrease in production cost, introduction of new technologies, or changes in seller expectations are some factors that can cause shifts in supply.
03

Increase in Supply

When supply increases, this means producers are willing to supply more of a good or service at each price level. Therefore, with an increase in supply, there is a shift in the supply curve. This leads to the question of which direction the shift would be - right or left.
04

Direction of the Shift

An increase in supply causes a shift to the right of the supply curve. On a graph, this would mean the curve would move towards the right. It is because the increased supply has altered the original supply curve, and at each price, the quantity supplied is now larger, taking the curve horizontally to the right.

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Most popular questions from this chapter

Define: a. elastic supply b. inelastic supply c. per-unit cost d. subsidy e. quota f. technology

Identify what happens to a given supply curve as a result of each of the following: a. Resource prices fall. b. Technology advances. c. A quota is repealed. d. A tax on the production of a good is repealed.

Use the term quantity supplied correctly in a sentence. Use the word supply correctly in a sentence.

Suppose three McDonald's restaurants operate in your town, and each pays its employees \(\$ 6\) per hour. If McDonald's started paying \(\$ 9\) per hour to its employees, would more, fewer, or the same number of people want to work for McDonald's, according to the law of supply?

The previous section explained how a supply curve can be vertical. If a supply curve is vertical, does it follow that supply is (a) elastic, (b) inelastic, (c) unit-elastic, or (d) none of the above? Explain your answer.
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