Factors Affecting Supply Curve Shifts

Changes in quantity supplied strictly as a function of price are referred to as movement along a supply curve. A shift of the entire supply curve is referred to as a change in supply; this could be due to any factor(s) that affects supply, other than price.

Factors affecting Supply Curve Shifts

Factors that would cause a shift in the supply curve include:

1. Cost: An increase in crude oil costs for a plastic manufacturer would shift the supply curve up and to the left. Changes in technology can dramatically decrease costs.

2. Government Tax Policy: Increases in business taxes will cause the supply curve to shift up and to the left. A government subsidy to producers will cause more supply to be available - the supply curve will shift down and to the right.

3. Weather/Climate: Changes in weather and/or climate will especially influence agricultural product supply.

4. Prices of Substitute Products: If farmers can grow wheat instead of corn, and the price of wheat goes up, then the supply curve for corn will shift up and to the left as more farmers switch from corn to wheat.

5. Number of Producers: As the number of firms/individuals producing a product increases, we would expect more supply to be available.