STRAND 3 CHAPTER 29: Demand, supply & market equilibrium


Price €


Price €


Price €


Displaying Increases and Decreases of Supply on a Diagram Movement Along a Supply Curve


A change in the selling price of a good or service will cause a movement along a supply curve showing the change in the quantity supplied of the good or service.


ґ When the price of cakes is €2, the quantity supplied is 40 cakes.


ґ If the price increases to €3, the quantity supplied for cakes would increase to 60 cakes.


Shifts of a Supply Curve


Rightward shift (Increase in supply for the good or service) ґ The school principal announced that the school’s Home Economics teacher will allow students to bake cakes in the school and provide some ingredients needed for students.


ґ This increased the supply for cakes by 20 units at every price level, as more students now want to bake cakes using the free ingredients and school facilities.


Price (€)


€1 €2 €3 €4 €5


Quantity Supplied (units) 20


40 60 80


100


NEW Quantity Supplied (units) 40


60 80


100 120


€5 €4 €3 €2 €1


€0 0 20 40 60 80 Quantity Supplied (Units) Leftward shift (decrease in supply for the good or service)


ґ Before the last class of the day, students were ready to head home and bake cakes for the sale the next day. Their Maths teacher had other ideas and announced they’d have a surprise exam the next morning.


ґ Some students decided they’d better study for this exam instead of baking cakes. This decreased the supply for cakes by 20 units at every price level.


Price (€)


€1 €2 €3 €4 €5


Quantity Supplied (units) 20


40 60 80


100


NEW Quantity Supplied (units) 0


20 40 60 80


€5 €4 €3 €2 €1


€0 0 20 40 60 80 Quantity Supplied (Units) 331 100 120 140


SUPPLY OF CAKES AT A BAKE SALE S2


S1 100 120 140


SUPPLY OF CAKES AT A BAKE SALE S1


SUPPLY FOR CAKES AT A BAKE SALE


€5 €4 €3 €2 €1


€0 0 20 40 60 80 Quantity Supplied (Units) 100 120 140


S2


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