1. Shifts of supply

2.  When the ceteris paribus condition is relaxed, the whole supply curve will move if any of the following factors change  Cost of production  Price of related products  State of technology

3. Cost of Production  An increase in the cost of production will move the Supply curve in towards the left. S S1 P q P q1 q2

4.  An increase in the cost of production may be caused by  wage increasing  increases in the cost of raw materials,  increases in compliance costs such as the need to use safety equipment,  holiday pay entitlements, fines, sales tax etc.

5.  A decrease in the cost of production will move the supply curve out to the right S S1 P Q P q1 q2

6.  A decrease in the cost of production may result from a  fall in real wages,  cheaper raw materials such as oil at the moment,  or cheaper compliance costs.  An example of cheaper compliance costs is the current Government looking at ways to simplify the Resource Management Act.

7. Price of Related Goods  A related good (or service) is one that can be produced using the same resources e.g. pancake or pikelet.  Can you think of any other examples?  An increase in the price of a related good will cause a decrease in Supply of this good.

8.  So if you could be a personal trainer or a team coach, and the price of personal trainers went up, you would offer more personal training services and less coaching services

9.  Switching between Dairy production and Lamb production are decisions made based on the price of related goods

10. Technology  Technology is the capital goods and processes that producers invest in to improve production  New technology always moves the Supply curve out to the left, otherwise it would not be taken on