A change in price causes a movement along the curve

• The higher the price of a product, the less demand for it there will be.
• If the price rises then demand will fall, this is known as an contraction in demand.

• The lower the pice of a product the more it will be demanded.
• If the price falls then demand will rise, this is known as an expansion in demand.

A change in price causes a movement along the curve

• The higher the price of a product, the more suppliers will produce..
• If the price rises then supply will rise, this is known as an expansion in supply.

• The lower the pice of a product the less will be supplied.
• If the price falls then supply will fall, this is known as an contraction in supply.

Shift of the Supply Curve

A shift of the supply curve represents an increase or decrease in the quantitiy supplied at each & every price. Several factors that can cause a shift in supply:

• Improvements in technology (can increase efficiency & reduce costs).
• Weather, climate and disease (especially agricultural products).
• Taxes and subsidies can make the costs of production more/less expensive and therefor increase or decrease supply.
• Natural disasters & wars can severly disrupt supply.
• Resources: discoveries of new resources or depleting reserves of resources can affect the supply of products.