Reasons for a change in supply . A change in supply or shift of the supply curve is not caused by a change in the price of the good being supplied; that would induce a change in the quantity demanded and a movement along the supply curve. A shift in the supply curve is caused by other factors, including: 1. Changes in the prices of other goods: Suppliers are frequently able to switch their production processes from one type of good to another. Farmers, for example, might decide to grow less wheat and more corn on the same land if the price of corn rises relative to the price of wheat. In this case, the supply curve for wheat would shift to the left , as in Figure 2 (a), as a consequence of the higher price for corn. 2. Changes in the prices of inputs: The prices of the raw materials or inputs used to produce a good also cause the supply curve to shift. An
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This note was uploaded on 11/18/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.