[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

Wrap-Up
SUPPLY CURVE
The supply curve gives the quantity of the good supplied at each price.
SHIFTS IN SUPPLY CURVES
Just as demand curves can shift, supply curves too can shift, so that the quantity
supplied at each price increases or decreases. Suppose a drought hits the breadbasket
states of mid-America. Figure 3.10 illustrates the situation. The supply curve
for wheat shifts to the left, which means that at each price of wheat, the quantity
firms are willing to supply is smaller.
SOURCES OF SHIFTS IN SUPPLY CURVES
There are several sources of shifts in market supply curves, just as we saw for market
demand curves. One is changing prices of the inputs used to produce a good. Figure 3.11
shows that as corn becomes less expensive, the supply curve for cornflakes shifts to
the right. Producing cornflakes costs less, so at every price, firms are willing to supply
S 0
S 1
PRICE OF WHEAT (p)
p
Postdrought
supply curve
Predrought
supply curve
PRICE OF CORNFLAKES
Cornflake
supply
curves
Q 2
Q 1
QUANTITY OF WHEAT (Q )
QUANTITY OF CORNFLAKES
Figure 3.10
SHIFTING THE SUPPLY CURVE TO THE LEFT
A drought or other disaster (among other possible factors) will
cause the supply curve to shift to the left, so that at each price,
a smaller quantity is supplied.
Figure 3.11
SHIFTING THE SUPPLY CURVE TO THE RIGHT
An improvement in technology or a reduction in input prices
(among other possible factors) will cause the supply curve to shift
to the right, so that at each price, a larger quantity is supplied.
SUPPLY ∂ 65