Allocation of Resources · 4 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 18% of your exam marks.
Supply appears alongside demand on virtually every paper; cost changes, technology, and taxes/subsidies are the most tested supply shifters.
| Movement along the supply curve | Shift of the supply curve | |
|---|---|---|
| What changes? | The good's own price | Any non-price factor (costs, technology, taxes, subsidies, number of firms, expectations, other-good prices, weather) |
| What does the curve do? | Stays put | Moves to a new position |
| What do we call the change? | Extension (price ↑) or contraction (price ↓) | Increase in supply (rightward) or decrease in supply (leftward) |
| What changes on the diagram? | The point on the curve | The |
Applying movement-vs-shift in a scenario question
What comes up: a stimulus introduces a real-world event (e.g. a government subsidy, a drought, a rise in oil prices, a new machine) and asks students to explain its effect on supply — or uses a diagram question asking which curve moves.
Write: first identify whether the factor changes the own price of the good or is a non-price factor. If it is a non-price factor, state that it shifts the entire supply curve (give direction: left or right), use the phrase "change in supply", and explain the chain (e.g. a subsidy reduces producers' costs → at every price they can profitably supply more → supply curve shifts right). If the scenario describes only the good's own price rising or falling, state that this is a movement along the curve — an extension or contraction of supply.
Watch out: using the wrong vocabulary loses marks. A change in quantity supplied (movement) is not the same as a change in supply (shift). Examiners specifically credit the correct term, so write "quantity supplied rises" for a movement and "supply increases" for a rightward shift.
| Vocabulary | "change in quantity supplied" | "change in supply" |