Changes in supply can occur due to changes in production costs, government policies, the number of producers, or business expectations. When supply increases, the supply curve shifts right, and when supply decreases, it shifts left. Supply is influenced by the prices of resources used in production - lower prices decrease costs and increase supply, while higher prices have the opposite effect. Productivity, technology, regulations, subsidies, and producer expectations can also impact supply by affecting production costs and the quantity producers are willing to supply at each price.

1. Factors Affecting Supply
Changes in Supply

2. Changes in Supply
• A change in supply occurs when producers offer
a different quantity of output at each possible
price.
• This might happen because of changes in the
cost of production, in government policies, in the
number of producers, or in the expectations of
businesses.
• When supply goes down, the supply curve shifts
to the left.
• When supply goes up, the supply curve shifts to
the right.

3. Factors Influencing Production
• Businesses use the four factors of production to
produce goods and services.
• When prices of these resources fall, costs of
production fall.
– Producers are then willing and able to offer more of
the product for sale at each price.
– The supply curve shifts to the right.
• When prices of resources rise, production costs
rise.
• Producers are then willing and able to offer less
of the product for sale at each price.
– The supply curve shifts to the left.

4. Productivity
• Productivity is the degree to which resources
are being used efficiently to produce goods and
services.
• Workers are more efficient when they produce
more output in the same amount of time.
– This reduces the company’s costs.
• More products are produced at every price,
which shifts the supply curve to the right.
• When productivity falls, production costs go up.
– The supply curve shifts to the left.

5. New Innovations
• Technology refers to the methods or
processes used to make goods and
services.
• New technology can speed up ways of
doing things, which can cut a business’s
costs.
• This pushes the supply curve to the right,
showing that the business is willing to
supply more at the same price.

6. Outside Influences
• Government actions can affect the cost of
production, causing a change in supply.
• In general, tighter government regulations
restrict supply, causing the supply curve to
shift to the left.
• Relaxed regulations lower the cost of
production, shifting the supply curve to the
right.

7. Subsidies
• To businesses, higher taxes mean higher costs, pushing
the supply curve to the left.
– Lower taxes mean lower costs, shifting the supply curve to the
right.
• A subsidy is a government payment to an individual,
business, or other group for certain actions.
• A subsidy paid to a producer lowers the cost of
production.
• This encourages current producers to remain in the
market and new producers to enter.
• When subsidies are repealed, costs go up, producers
leave the market, and the supply curve shifts to the left.

8. Expectations
• Producers’ expectations also affect supply.
– If they expect strong consumer demand, they will
produce more.
– If they expect weak demand, they will produce less.
• A change in the number of suppliers causes a
change in market supply.
• As more firms enter an industry, they increase
the supply in the market, shifting the curve to the
right.
• If some suppliers leave, supply decreases,
shifting the curve to the left.

9. Elasticity of Supply
• Supply elasticity is a measure of how the quantity
supplied of a good or service changes in response to
changes in price.
– If the quantity changes a great deal when prices go up or down,
the product is said to be supply elastic. If the quantity changes
very little, the supply of that product is inelastic.
• Supply elasticity depends on how quickly a company can
change the amount it makes in response to price
changes.
• Products that cannot be made quickly or that are
expensive to produce tend to be supply inelastic.
• Products that can be made quickly without large
investments of money or skilled labor tend to be supply
elastic.

10. Elasticity of Supply
• Supply elasticity is a measure of how the quantity
supplied of a good or service changes in response to
changes in price.
– If the quantity changes a great deal when prices go up or down,
the product is said to be supply elastic. If the quantity changes
very little, the supply of that product is inelastic.
• Supply elasticity depends on how quickly a company can
change the amount it makes in response to price
changes.
• Products that cannot be made quickly or that are
expensive to produce tend to be supply inelastic.
• Products that can be made quickly without large
investments of money or skilled labor tend to be supply
elastic.