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FIGURE 1.5-3 A Movement Along the Supply Curve Versus a Shift of the Supply Curve

Price of
lumber
(per board foot)
S S 2
$2.00 A movement 1
along the supply
1.75 curve . . .

1.50 B
The increase in quantity supplied 1.25
when going from point A to point
B reflects a movement along the 1.00 A C
supply curve: it is the result of a . . . is not the
rise in the price of the good. The 0.75 same thing as
increase in quantity supplied a shift of the
when going from point A to point 0.50 supply curve.
C reflects a shift of the supply
curve from S 1 to S 2 : it is the result 0 70 100 112 120 150 170
of an increase in the quantity sup- Quantity of lumber
plied at any given price. (billions of board feet)

Understanding Shifts of the Supply Curve

Figure 1.5-4 illustrates the two basic ways in which supply curves can shift. When
economists talk about an “increase in supply,” they mean a rightward shift of the supply
curve: at any given price, producers supply a larger quantity of the good than before.
This is shown in Figure 1.5-4 by the rightward shift of the original supply curve S to S .
2
1
And when economists talk about a “decrease in supply,” they mean a leftward shift of
the supply curve: at any given price, producers supply a smaller quantity of the good
than before. This is represented by the leftward shift of S to S .
3
1

FIGURE 1.5-4 Shifts of the Supply Curve

Price

S 3 S 1 S 2

Increase
in supply

Any event that increases supply
shifts the supply curve to the Decrease
right, reflecting a rise in the quan- in supply
tity supplied at any given price.
Any event that decreases supply
shifts the supply curve to the left,
reflecting a fall in the quantity
supplied at any given price. Quantity

40 Macro • Unit 1 Basic Economic Concepts
Copyright © Bedford, Freeman & Worth Publishers.
Strictly for use with its products. For review purposes only. Not for redistribution.

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