When a non-price factor changes--such as technology, expectations, prices of related goods, prices of inputs, or the number of sellers, there is a change in supply, which results in a shift in the supply curve.
Let's break down how each of these non-price factors can affect supply:
Technology: Advancements in technology can lead to more efficient production processes, reducing the cost of production. This can result in an increase in supply, shifting the supply curve to the right. Conversely, technology that makes production more expensive or less efficient could decrease supply, shifting the curve to the left.
Expectations: If producers expect higher prices for their goods in the future, they might decrease supply now in anticipation of selling more in the future at those higher prices. This would shift the supply curve to the left. Conversely, if they expect prices to fall in the future, they might increase supply now, shifting the supply curve to the right.
Prices of Related Goods: If a firm produces multiple products, the price of one can affect the supply of another. For instance, if the price of beef rises, a rancher might decide to supply more beef and less leather, leading to a decrease in the supply of leather.
Prices of Inputs: If the cost of production inputs (like raw materials, labor, etc.) increases, it becomes more expensive for producers to supply their goods, which could lead to a decrease in supply (shift to the left). On the other hand, if input costs decrease, the supply might increase (shift to the right).
Number of Sellers: If more producers enter the market, the overall market supply will increase, shifting the supply curve to the right. Conversely, if sellers leave the market, the overall market supply will decrease, shifting the supply curve to the left.
In summary, when non-price factors change, there is a change in supply that results in a shift of the supply curve either to the right (increase in supply) or to the left (decrease in supply).