When there is a change in a non-price determinant of supply, which of the following occurs in the supply curve?

• A. The supply curve shifts either to the left or right.
• B. The equilibrium price remains unchanged.
• C. The demand curve shifts.
• D. There is a movement along the supply curve.

Answer: (A)

Verified step by step guidance

1. Understand that a non-price determinant of supply refers to factors other than the price of the good itself that affect supply, such as technology, input prices, number of sellers, expectations, or government policies.
2. Recall that when a non-price determinant changes, it affects the entire supply relationship, causing the supply curve to shift rather than causing movement along the curve.
3. Recognize that a shift to the right of the supply curve indicates an increase in supply (more quantity supplied at every price), while a shift to the left indicates a decrease in supply (less quantity supplied at every price).
4. Note that a movement along the supply curve happens only when the price of the good changes, not when non-price determinants change.
5. Conclude that the correct effect of a change in a non-price determinant of supply is a shift of the supply curve either to the left or right, and this may lead to changes in equilibrium price and quantity, but the supply curve itself shifts.