Question

Explain the difference between “Shift of Supply Curve” and “Movement along Supply Curve”. State one factor responsible for each. Use diagrams.

Answer 1

Basis	Shift in Supply Curve	Movement Along Supply Curve
Meaning	Assuming that the price remains constant, there is change in the supply because of change in other variables such as technological change, input prices, unit tax and price of other related goods.	Assuming that other variables remain constant, there is a change in quantity supplied because of the change in the own price of a good.
Functional relation	`Q_x=f(barP_x,P_y,P_F,T,G,G_p,N_F)` where `barP_x="Own price of a good"` Py = Price of related goods PF = Price of factors of production T = State of technology G = Goal of the firm Gp = Government policy NF = Number of firms	`Q_x=f(barP_x,barP_y,barT,bar(P_F),barG,barG_p,bar(N_F))` where `barP_x="Own price of a good"` `barP_y="Price of related goods"` `bar(P_F)="Price of factors of production"` `barT="State of technology"` `barG="Goal of the firm"` `barG_p="Government policy"` `barN_"F"="Number of firms"`
Shift and Movement	The supply curve of the firm will shift rightward or leftward.	The supply curve of the firm will move upwards or downwards.
Types	Shift in the supply curve— increase in supply and decrease in supply.	Movement along a supply curve—expansion of supply and contraction of supply.
Diagram for increase/expansion	Increase in supply	Expansion in supply
Diagram for decrease/contraction	Decrease in supply	Contraction in supply