Which of the following changes would not shift the supply curve for a good or service?

Question

BlackTom AI · Accepted Answer

To begin, let's restate the question and the four options to keep the focus on what is being asked. 
Option 1: A change in the price of the good or service. 
Option 2: A change in input prices. 
Option 3: A change in expectations about the future price of the good or service. 
Option 4: A change in production technology.

Now, evaluate each option on whether it shifts the supply curve or simply moves along it. 
Option 1: A change in the price of the good or service. This is a movement along the supply curve, not a shift. When the price of the good changes, producers respond by changing the quantity supplied at that price, but the factors that determine the position of the curve (like technology, input costs, etc.) remain the same. The supply schedule shows how much will be supplied at each price, so a price change is a movement along that schedule. 
Option 2: A change in input prices. Input costs are a fundamental determinant of supply. If input prices rise, producing the good becomes more expensive, and the entire supply curve shifts left (a lower quantity supplied at each price). Conversely, input price reductions shift the curve right. This is a classic supply-shift factor, not a movement along the curve. 
Option 3: A change in expectations about the future price of the good or service. If producers expect higher future prices, they may restrict current supply to price discriminate via future sales, or stockpile, shifting the curve. If they expect lower future prices, they may increase current supply. Either way, expectations alter the curve’s position, not just the current price effect. This is a supply determinant that causes a shift. 
Option 4: A change in production technology. Advances in technology typically make production more efficient, reducing costs and increasing supply at all price levels; this shifts the supply curve to the right. Poorer technology would shift it left. This is a primary supply-shift factor, not a movement along the curve.

In summary, among the listed factors, only a change in the price of the good or service causes a movement along the supply curve, while changes in input prices, expectations about future prices, and production technology cause shifts in the curve. The reasoning hinges on distinguishing movements along a curve (price changes) from shifts in the curve (external determinants that alter quantity supplied at every price).

Which of the following changes would not shift the supply curve for a good or service?

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Which of the following changes would not shift the supply curve for a good or service?

View Explanation

Log in for full answers

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