good or service, it does not cause the supply curve itself to shift.
64 3 • Demand and Supply

FIGURE 3.15 Factors That Shift Supply Curves (a) A list of factors that can cause an increase in supply from S0 to
S1. (b) The same factors, if their direction is reversed, can cause a decrease in supply from S0 to S1.

Because demand and supply curves appear on a two-dimensional diagram with only price and quantity on the

axes, an unwary visitor to the land of economics might be fooled into believing that economics is about only

four topics: demand, supply, price, and quantity. However, demand and supply are really “umbrella” concepts:

demand covers all the factors that affect demand, and supply covers all the factors that affect supply. We

include factors other than price that affect demand and supply by using shifts in the demand or the supply

curve. In this way, the two-dimensional demand and supply model becomes a powerful tool for analyzing a
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