Chapter 6, Problem 1CYU

To determine

The question requires us to select the events which represent a change in supply, and a movement along the supply curve.

Explanation of Solution

The given options are:

1. A real estate boom causes the price of houses to increase which encourages homeowners to sell their houses. This statement represents a movement along the supply curve due to a change in the price of houses.
2. The harvest season indicates a higher supply of strawberries. An increase in supply causes the supply curve to shift rightward and results in a lower price of the product. So, here supply curve will shift.
3. Due to the shortage of workers in the labor market, fast-food chains raise wages. Here, a shortage of workers indicates a fall in supply which causes the supply curve to shift leftward. Thus, the supply curve will shift.
4. Due to the movement of workers towards the higher wage area, the supply of workers will rise. An increase in supply will shift the supply curve rightward.
5. Advancement in new technology will enhance the production capacity and thus will increase the supply in the market. A higher supply will shift the supply curve rightward

Economics Concept Introduction

Any change in supply will shift the supply curve while any change in quantity supplied will cause the movement along the supply curve.

The supply of a commodity will change due to the following reasons:

• Change in price of relative goods (substitutes and complementary products) 
• Change in technology
• Change in input prices
• Change in expectations
• Change in the number of producers

Any change in the price of the commodity changes the quantity supplied.