Question

Question: Explain whether each of the following events represents (i) a shift of the supply curve or (ii) a movement along the supply curve.

1. More homeowners put their houses up for sale during a real estate boom that causes house prices to rise.
2. Many strawberry farmers open temporary roadside stands during harvest season, even though prices are usually low at that time.
3. Immediately after the school year begins, fast-food chains must raise wages, which represent the price of labor, to attract workers.
4. Many construction workers temporarily move to areas that have suffered hurricane damage, lured by higher wages.
5. Since new technologies have made it possible to build larger cruise ships (which are cheaper to run per passenger), Caribbean cruise lines offer more cabins, at lower prices, than before.

Short answer

1. Movement along the supply curve.
2. A shift in the supply curve.
3. A shift in the supply curve.
4. Movement along the supply curve.
5. A shift of the supply curve.

Step-by-step solution

Explanation for part (a)

When the household experiences boom in real estate and the price of hoses rises, the supply of houses increases, then there will be a movement along the supply curve. The increase in supply is because of a price change; thus, there is an expansion of the supply curve shown by upward movement along the supply curve.

Explanation for part (b)

As the farmers open more roadside stands, the supply of strawberries increases at the given price. The increase in supply is not because of price but because of the harvest season. Thus, there will be a rightward shift in the supply curve.

Explanation for part (c)

At the beginning of school, the fast-food chain offers more wages to attract laborers. The labor supply is low at the given wage; thus, there will be a leftward supply curve shift during school days. Hence, fast-food chains offer wages to attract laborers.

Explanation for part (d)

As the hurricane causes damage, the need for renovation activities results in higher wages which attract labor and increase the supply. Thus, this is a movement along the supply curve.

Explanation for part (e)

With the new technology, there is an increase in the supply of cabins. There is a shift of the supply curve to the right. The increase in supply is not because of a price change. Thus, there will be a shift in the supply curve.