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Unformatted text preview: broadly,
the natural environment. Good weather can increase
the supply of many agricultural products and bad
weather can decrease their supply. Extreme natural
events such as earthquakes, tornadoes, and hurricanes
can also influence supply.
Figure 3.5 illustrates an increase in supply. When
supply increases, the supply curve shifts rightward and
the quantity supplied at each price is larger. For example, at $1.00 per bar, on the original (blue) supply
curve, the quantity supplied is 6 million bars a week.
On the new (red) supply curve, the quantity supplied
is 15 million bars a week. Look closely at the numbers
in the table in Fig. 3.5 and check that the quantity
supplied is larger at each price.
Table 3.2 summarizes the influences on supply
and the directions of those influences. An Increase in Supply FIGURE 3.5
Price (dollars per bar) is expected to rise, the return from selling the good
in the future is higher than it is today. So supply
decreases today and increases in the future. A' 25
Quantity supplied (millions of bars per week) 5 Original supply schedule New supply schedule Old technology New technology Quantity
per bar) Quantity
per week) (dollars
per bar) (millions
per week) A 0.50 0 A' 0.50 7 B 1.00 6 B' 1.00 15 C 1.50 10 C' 1.50 20 D 2.00 13 D' 2.00 25 E 2.50 15 E' 2.50 27 A change in any influence on sellers’ plans other than the
price of the good itself results in a new supply schedule and
a shift of the supply curve. For example, a new, cost-saving
technology for producing energy bars changes the supply
of energy bars. At a price of $1.50 a bar, 10 million bars
a week are supplied when producers use the old technology
(row C of the table) and 20 million energy bars a week are
supplied when producers use the new technology (row C ').
An advance in technology increases the supply of energy
bars. The supply curve shifts rightward, as shown by the
shift arrow and the resulting red curv...
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