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.

Try It

Question 1

As an economist at the USDA you observe there has been a change in the market for processed corn this past year (displayed below). Which option below can best explain this recent market shift?


    • The cost of farm labor has decreased.
    • There has been an exceptionally short growing season this past year.
    • The price of wheat, a substitute, has increased.

Question 2

Several unfavorable changes have occurred this past year for almond suppliers in California. A drought continues to ravage crops, and a recent strike by migrant farm laborers has sent production costs soaring. In response to these recent events the almond growers lobby has successfully petitioned the California state legislator for a significant subsidy to almond farmers.

Given these events, how would we expect the supply curve for almonds to react?

    • The supply curve would shift inwards.
    • It is impossible to tell with the given information.
    • The supply curve would shift outwards.

Question 3

List and explain three out of the four factors responsible for shifts in the supply curve.