(e) Price of supplying alternative products Sometimes it is possible for sellers to switch to supplying other goods if it is more profi table. A farmer may stop supplying potatoes if the long term price of carrots rises and makes them a more profi table crop. Changes in supply due to switching production to alternative products will cause a supply curve to shift.
Numeracy
Citroën is a large French car company. Identify what effect each of the following situations will have on the supply curve of Citroën cars. Tick the correct answer.
1. Citroën increases the prices of its cars. Movement up q Movement down q Shift left q Shift right q
2. Citroën decreases the prices of its cars. Movement up q Movement down q Shift left q Shift right q
3. A shortage of metals causes the cost of car production to rise sharply. Movement up q Movement down q Shift left q Shift right q
4. New technology means cars can be produced at much lower costs. Movement up q Movement down q Shift left q Shift right q
5. A major war disrupts the supply of oil and raw materials needed to make cars.
Movement up q Movement down q Shift left q Shift right q
6. Toyota launch a very successful advertising campaign causing Citroën sales to fall. Movement up q Movement down q Shift left q Shift right q
7. Compare your answers with another student’s answers.
