A change in price causes a change in the quantity supplied. A change in a factor that affects the quantity supplied other than price causes a change in supply. The factors that cause a change in supply are called supply shifters. Supply Shifters Input Prices Resources price changes have a direct effect on costs and inversely affect supply. Technology Technological change reduces costs and increases supply.
Regulations affect costs directly and supply indirectly.
The supply of a product is directly related to the number of sellers. Substitutes in Production A rise in the price of an alternative output will shift resources toward that product and away from current uses. Supply decreases when the price of a substitute in production rises. Taxes raise costs and reduce supply. Excise taxes are a fixed dollar amount per unit of the item taxed. causes a parallel shift in the supply curve.