Econ 101: Shift the supply line, or just move along it?

Question

This is pretty rudimentary economics, but it's been confusing me. In a simple supply/diagram graph, when do you move up the supply line, and away from the equilibrium, and when do you shift the whole supply line up or down, and create a whole second line ?

Like, in a simple diagram for lemon markets, say there's a nice little equilibrium in the middle, and say there's a lemon freeze decreasing the amount of lemons in that years lemon crop. Do I move up the supply line (to a higher price) because now they will be sold at a higher price? Or do I move down because there is less of a supply (though this means price would be lower?) Or is a second supply line created, and shifted off from the original one, because of the freeze?

Very confused.

Thanks!

Answer 1

If it affects the demand curve, it is a movement along the supply curve.  Things that affect the demand curve include income, consumer tastes, availability of substitutes, etc.  Things that would affect how much people want to buy of it.

If it affects the supply curve, it's a shift in the supply curve.  Things that affect the supply curve include increases in the cost of inputs, a higher tax, etc.  Anything that would affect how much producers want to sell.

A freeze would decrease the supply of lemons that producers can supply.  Therefore, it is a shift leftward in the supply curve.  You don't have to worry about shifting to get a particular change in price or quantity since this will be taken care of by the demand curve and the shift in the supply curve.

Answer 2

First you have to understand the little thing which is difference b/w Expansion/Contraction in Supply and Increase/Decrease in Supply.

Expansion/Contraction in Supply:

                     Expansion or Contraction happens on same supply curve, which follows the simple Law of Supply, When Price increase supply will Expand and when Price decrease supply will Contract. Both things happen on same supply curve, you don't have need to draw separate line for these things.

Increase/Decrease in Supply:

               If prices are same but the supply increases then it is increase in supply and you have to draw a separate line upward to show the increase in supply and vice verse.

Now come to your question, according to your question initially supply is reducing due to crop. you have to draw a separate line which shows the shifting of supply curve leftward and set the high price.

I hope it will work for you.

Answer 3

Move the line.  It's not that complicated.