(ii) What is shift in supply curve? |
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| Ans : When there is change in quantity supply not because of it’s own price but because of some other reasons such as change in technology, change in price of other goods etc. it is known as shift in supply curve. In case of shift in supply curve, the supply curve shifts either rightward or leftward from it’s original supply curve. It is also known as change in supply. There are two types of shift in supply curve. They are:
a) Rightward shift in supply curve (Increase in supply):- Rightward shift in supply curve refers to more quantity supplied at same price of the commodity. In this situation the initial supply curve shift rightward of the original supply curve. The factors that causes rightward shift in supply are decrease in cost of factors of production, improvement in technology etc.
b) Leftward shift in supply curve (Decrease in supply):- Leftward shift in supply curve refers to less quantity supplied at same price of the commodity. In this situation, the initial supply curve shifts leftward of the original supply curve. The factors that causes, leftward shift in supply curve are increase in cost of factors of production increase in tax policy etc.
The concept of shift in supply curve can be explained with the help of following diagram:
In the given diagram, ox-axis represents quantity supply and oy-axis represent price. SS is the original supply curve which slops upward from left to right, which shows that at price OP, quantity supply is OM. S₁S₁ is the rightward shift in supply curve. It is shows that at same price OP, quantity supply increases from OM to OM₁. S₂S₂ is the leftward shift in supply curve. It is shows that at same price OP, quantity supply decreases from OM to OM₂.
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