Factors Affecting Supply
Read this section to learn more about how factors that affect supply, such as increases or decreases in the costs of production, are graphed as shifts of the supply curve. Make sure to answer the "Try It" quiz questions.
Shift in Supply Due to Production-Cost Increase
We know that a supply curve shows the minimum price a firm will accept to produce a given quantity of output. What happens to the supply curve when the cost of production goes up? Following is an example of a shift in supply due to an increase in production cost.
Figure 3. Delivery Options. Since this is not a realistic option for pizza suppliers, what happens to the supply curve when production costs increase?