Q: Describe THREE factors which could cause an upward shift in the supply curve for a product. Note from examiner's report: It should be noted that an upward shift in the supply curve for a product is consistent with a decrease in supply. Many candidates described factors which would increase supply... Now my question is is an upwards shift in the supply curve the same as a shift left? I know that when you talk about most curves in maths, a shift up and a shift left are different, but I can't find the distinction between a shift up (down) and a shift left (right) for the supply curve in the notes, nor can I find it online. Even trying to apply my intuition to it isn't working. Thanks
I believe that if we draw a supply curve S, and then draw an identical supply curve above it say S* (consider a higher "P-axis" intercept), then the supply curve has moved "up" in the sense that the curve lies entirely above of the other curve since for a given Q S* always results in a higher P than S, and S* is "to the left" of S since for any P S* results in a lower Q than for S. Clearly S* is a decrease in supply since for any given P under S* producers are always willing to produce less than under S. Sounds confusing i know.
From a CT7 perspective I think the answer is yes because only a straight line is ever considered. I'm not sure there's much of a conceptual difference between the two really, provided the supply curve slopes upwards (as you'd expect in most circumstances). Both represent an increase in the amount a supplier is willing to produce for a given price as was stated. Theoretically you could construct some weirdly shaped supply curves where the two are different. Suppose there is a limited amount of a commodity readily available, but producing more requires a huge amount of work. You might get a supply curve that rapidly increases to some limit then tails off to something close to a flat line as the readily available supply is exhausted and suppliers need a much higher price to produce more. Discovering a new resource might increase where that limit occurs (a shift up due to an increase in supply) whereas a new process for exploiting the existing readily obtained resources more efficiently will leave that limit where it is, but reduce the price the suppliers require to exploit the existing resource (a shift to the left due to a fall in costs). I honestly can't think of a general rule for these weird and wonderful scenarios, and I doubt you'd need to consider this sort of issue for CT7 unless it's really changed since I sat it. Of course if there are any economics experts out there who know better, I'd be interested to hear their perspective as it's quite interesting.
I can't understand what your getting at here.. To describe this commodity i have drawn a supply curve that is like a standard exponential and then is asymptotic towards some vertical line that represents the maximum possible quantity supplied. This still seems to obey the left/up principal.. can you please elaborate?
Blast.... I've got them the axes the wrong way around haven't I? I always got that convention wrong - just seems so much more natural to think of supply as y-axis. Oh well...... I guess my point was that if you introduce an asymptote then you can distinguish qualitatively between a shift left and a shift up, as only one of these will move the line your curve asymptotes to. Alas somewhat confused by my mix up, and I agree it's quite artificial.
Haha, i was thinking for a minute "Dee sounds like he/she knows his/her stuff, this can't possibly be wrong" but i do understand your general idea.
