With the aid of at least one diagram and examples, explain the difference between a movement along the supply curve and a shift of the supply curve (10 marks)
A supply curve is a curve showing the relationship between the quantities of a good that firms (or a firm) are willing and able to produce and sell during a particular time period and their respective prices, ceteris paribus (all other things being equal). An increase price will usually lead to an increase in the quantity supplied, and thus there is a positive relationship between price and supply.
A movement along a supply curve only occurs when the price changes, ceteris paribus. In other words, the price changes but the other non-price determinants remain constant. A movement along the supply curve, caused by a change in price, is called a ‘change in quantity supplied’.