Introduction

After you have worked through this section of the learning unit, you should be able to:

  • explain with the aid of diagrams the impact of non-price factors such as the number of suppliers and the weather on supply

If more businesses decide to produce fried chicken pieces, the quantity supplied to the market at each price will increase and the supply curve will shift to the right. However, a decline in the number of suppliers will reduce the supply of fried chicken pieces and the supply curve will shift to the left.

Watch the following video clip about the imapct of an increase in the number of suppliers:

THE WEATHER

Weather also plays a key role in the supply of certain goods such as maize, meat and fresh produce. While a drought will cause a decline in the supply of these goods (the supply curve for the goods will shift to the left), good rains will lead to an increase in these goods (the supply curve will shift to the right).

A decrease in supply

An increase in supply

Activity

Complete the table below by indicating what happens to the supply curve.

You must indicate whether there is an upward movement along, a downward movement along, a rightward shift or a leftward shift of the supply curve.

You must also give a correct description of the effect. You must indicate whether there is a decrease in the quantity supplied, an increase in the quantity supplied, an increase in supply or a decrease in supply.

Supply curve Effect
Price of the good Increase

Decrease
Cost of production Increase

Decrease
Substitutes goods in production Price increase

Price decrease
Technology Improvement
Number of sellers Increase

Decrease
Expected prices Increase

Decrease
Click to see the answer
  Supply curve Effect
Price of the good Increase

Decrease

 Upward movement along

Downward movement along

 Increase in quantity supplied

Decrease in quantity supplied
Cost of production Increase

Decrease

 Shifts to the left

Shifts to the right

 Decrease in supply

Increase in supply
Substitutes goods in production Price increase

Price decrease

 Shifts to the left

Shifts to the right

 Decrease in supply

Increase in supply
Technology Improvement Shifts to the right Increase in supply
Number of sellers Increase

Decrease

 Shifts to the right

Shifts to the left

 Increase in supply

Decrease in supply
Expected prices Increase

Decrease

 Shifts to the left

Shifts to the right

 Decrease in supply

Increase in supply