In 200500 words in your own words 1 What will make the suppl

In 200-500 words in your own words:

1. What will make the supply line shift?

2. What will make the demand line shift?

3. How does a change in price affect supply and demand?

4. What is the difference between a shift of the supply/demand and move along the supply/demand line?

Solution

1.
Supply line shifts to the rightward or leftward direction and it depends upon the different factors. The first factor is the cost of input factors of production. With an increase in the cost, supply shifts to the left and vice versa. The second factor is the technological development. With technological advancements, supply curve shifts to the right direction. The third factor is the weather conditions. A good weather causes supply curves to shift rightward and poor weather causes the supply curve to shifts to the left direction.

2.
Demand line will shift due to many factors and it can be in the right or left direction. The first factor is the income level as an increase in the income, will cause demand line to shift in right direction. Second factor is taste and preferences. A favourable taste and preference, will cause demand to shift in right direction and vice versa. The third factor is the presence of substitutes and complements in the market that shifts the demand line. The fourth factor is advertising that also makes a shift in the demand line.

3.
With increase in price, demand decreases and with decrease in price, the demand increases. The movement or the change of demand, takes place along the demand curve. It makes the demand curve to be downward sloping.
With increase in price, supply increases and with decrease in price, supply decreases. Here, the movement takes place along the supply curve. It makes supply curve to be upward sloping.

4.
Shift in supply and demand takes place due to factors other than the price, but movement along the demand and supply line takes place due to the price only.