Which factors influence a supply curve?

Influencing factors of the offer according to economics

Reaction to changed market conditions

The supply curve is formed as a graphic statement through the price and the supply quantity. It can experience a movement along the supply curve as a result of a price change in that the supply quantity changes, but it can also experience shifts. In both cases there is a change, with the movement only changing the price, but there are more factors in the market.

Changing facts shape the offer

The shifts differ from the movement in that only the price changes during the movement. With the shift, however, the price remains the same, but there are other factors that change the supply curve. This includes competition and manufacturing processes as examples, but also the suppliers' own expectations.

The supply curve is shifted because the relationship between price and supply volume does not change, but the starting position is new due to changed framework conditions. If there are suddenly more sellers, this can increase the amount on offer or, conversely, reduce it if there are fewer suppliers.

Thus, the overall economic situation with many factors is also relevant for the supply curve. Of course, the factors also depend on the offer and are not equally important for every company. A service company also provides services, but does not produce any goods and generally does not need any raw materials that can change the price.

Nevertheless, the considerations that can lead to a shift in the supply curve are the same for all companies, only the factors are more individual from industry to industry and from company to company. The function also plays a role, because a manufacturer is dependent on the raw material, a trading company can perhaps refrain from one product and choose another instead. A service provider may not have one or the other problem, but when a lot of new competition comes, the conditions change permanently for him.