Page 41 - 2023-bfw-Macro-Krugman-Econ-4e

Table 1.5-1 Factors That Shift Supply

When this But when this
happens . . . . . . supply increases. happens . . . . . . supply decreases.
Price Price

. . . supply of . . . supply
When the price of the good When the price of of the good
an input falls . . . increases. an input rises . . . decreases.
S 1 S 2 S 2 S 1
Quantity Quantity
Price Price
When the price When the price . . . supply
of a related good . . . supply of of a related good of the
or service such the original or service such original
as a substitute in good increases. as a substitute in good
production S 1 S 2 production S 2 S 1 decreases.
falls . . . rises . . .
Quantity Quantity
Price Price
When the price When the price . . . supply
of a related . . . supply of of a related of the
good such as a the original good such as a original
complement in good increases. complement in good
production S 1 S 2 production S 2 S 1 decreases.
rises . . . Quantity falls . . . Quantity

Price Price
. . . supply
When the price is . . . supply of When the price is of the
expected to fall in the good expected to rise good
the future . . . increases today. in the future . . . decreases
S 1 S 2 S 2 S 1 today.
Quantity Quantity
Price Price
When the . . . market When the . . . market
number of supply of the number of supply of
producers good increases. producers the good
rises . . . S 1 S 2 falls . . . S 2 S 1 decreases.
Quantity Quantity
Price Price
When the When the best
technology . . . supply of technology used . . . supply
used to produce the good to produce the of the good
the good increases. good is no longer decreases.
improves . . . S 1 S 2 available . . . S 2 S 1
Quantity Quantity

for sale in the winter. In each case, producers make a decision of when to sell a given
product based on a comparison of the current price versus the expected future price.
This example illustrates how changes in expectations can alter supply: an increase in
the anticipated future price of a good or service reduces supply today, a leftward shift
of the supply curve. Similarly, a fall in the anticipated future price increases supply
today, a rightward shift of the supply curve.

Changes in the Number of Producers Just as a change in the number of consum-
ers affects the demand curve, a change in the number of producers affects the supply

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

02_APKrugman4e_40932_MacroU01_002_062.indd 42 05/07/22 10:51 AM