What is the difference between movement along the supply curve and a movement of the supply curve?

To understand the difference between movements along the supply curve and shifts of the supply curve, let’s start by understanding the law of supply.

The law of supply states that if the price of a good or service increases, then the quantity supplied will also increase.

To understand this fully, you have to think like a producer. Let’s assume that producers want to make as much money as possible. Also, remember that producers—like everyone else—make choices. For example, a T-shirt maker can choose to make T-shirts of various colours and styles, print different things on their T-shirts, or even make a different kind of clothing altogether. Putting these ideas together, we can better understand that the law of supply says that producers will allocate their productive resources towards whatever makes them the most money. So if the price of green T-shirts goes up—this doesn’t change the cost of making it—producers will be more interested in making (and selling) green T-shirts, because they can earn greater profits.

The law of supply directly refers to the supply curve: the supply curve is upward-sloping because, based on the selling price, producers will produce more (or less) of a good. The supply schedule shows this relationship: :::center

Price	Quantity supplied
$0	0
$10	50
$20	100
$30	150
$40	200
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The supply schedule shows a movement along the supply curve.

If this is true, then why don’t producers simply raise the price of a good and produce more? This is because, in the demand and supply model, price is determined by the interaction of the demand curve and the supply curve: consumers are less likely to buy a good at higher prices.

Lastly, let’s look at a shift of the supply curve. As described above, the supply curve shows the relationship between price and quantity supplied, but it doesn’t give much insight into the production of the good itself. For a producer to make a given good or service, they will incur production costs. Among these are opportunity costs: the value of other goods or services the producer could make, and the best time to supply a product to the market. Along with the selling price, these factors influence how much of a product the producer will make. If one of these other factors changes, for example, the cost of raw materials increases, the relationship between price and quantity supplied changes. This is because the profit has decreased for every price, and the producers are less interested in producing the product.

Together, these other factors are known as non-price determinants of supply. Changes to these determinants decrease supply (the supply curve shifts left) and increase supply (the supply curve shifts right).

:br :::center

Non-price determinant of supply	Supply shifts right if…	Supply shifts left if…
Cost of raw materials/labour	costs decrease	costs increase
Price of related goods (joint supply)	price of other goods increases	price of other goods decreases
Price of related goods (competitive supply)	price of other goods decreases	price of other goods increases
Taxes and subsidies	indirect taxes decrease/subsidies increase	indirect taxes increase/subsidies decrease
Future expectations of price	prices are expected to fall	prices are expected to rise
Technology	technology increases	technology decreases
Number of firms	firms join market	firms leave market
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