6. Movements along versus shifts of supply curves Consider the market supply of cereal. Complete the following table by indicating whether an event will cause a movement along the supply curve for cereal or a shift of the supply curve for cereal, holding all else constant. Event Movement Along Shift An increase in the price of cereal An increase in the price of oats (used in the production of cereal) A change in expectations about the future price of cereal O oo
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The quantity supplied of a good or service refers to the amount of good or service that the producers of the good or service are willing and able to sell. The supply curve of good shows the relationship between the quantity supplied of the good by the firms in the market and the price of the good and the supply curve of a good is an upward sloping curve due to the law of supply which says that the quantity supplied of the good increases when the price of the good increases keeping all other factors affecting the supply of the good constant. As the market supply curve of the good keeps other things that affect the supply of a good constant therefore when these other things change then the market supply curve of good shifts.
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