Answer to Question #172376 in Microeconomics for Tayyaba

Question

Explain the following through graph:

Does a change in price lead to a movement along the supply curve or a shift in the supply curve?

Answer 1

An increase in the Price of goods sold From P1 to P2 encourages the supply to increase the quantity of goods he supplies in order to maximize profit. From Q1 to Q2.

An increase in the price of goods sold leads to a movement along the supply curve from point A to C if all other factors are kept constant.

This is illustrated below.