illustrates.

FIGURE 3.14 Supply Curve Shifts When the cost of production increases, the supply curve shifts upwardly to a

new price level.

Summing Up Factors That Change Supply

Changes in the cost of inputs, natural disasters, new technologies, and the impact of government decisions all
affect the cost of production. In turn, these factors affect how much firms are willing to supply at any given

price.

Figure 3.15 summarizes factors that change the supply of goods and services. Notice that a change in the price

of the product itself is not among the factors that shift the supply curve. Although a change in price of a good or

service typically causes a change in quantity supplied or a movement along the supply curve for that specific

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