Changes in the Quantity Supplied |
Because of the Law of (eventually) Increasing Opportunity Costs, there is a positive, direct, upward-sloping relationship between price and quantity.
To get more production of of good, more and more of the alternative good must be foregone. This is due to the fact that not all resources are equally well suited to making both goods.
To go from point A to point B on the production possibility frontier, giving up corn to produce more cattle. Those fields that are least costly in terms of corn production will be switched first. So to get more cattle production, other things being held constant. a higher price for cattle must be offered.
When the price increases, there is an increase in the quantity supplied.
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A Change in Supply |
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Technology often shifts the Supply Curve.
A new technology would not be adopted unless it made the production better, faster, and cheaper. So the entire Supply Curve would shift to the right.This is an increase in supply, where at every price there is a greater quantity supplied.
The cost of resources used in production often shifts the Supply Curve.
An increase in the cost of leasing the grazing land for cattle would shift the Supply Curve to the left. This is a decrease in supply, where at every price there is a smaller quantity supplied.
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