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Overview

A shift of the market supply curve occurs when supply conditions (other than the price of the good itself) change.



The figure above shows a shift in the supply curve from S0 to S1.



If the price of the good is P1, suppliers would be willing to increase supply from Q0 to Q1 under the new supply conditions.

A rightward (or downward) shift of the curve may be caused by the factors influencing supply:

A fall in the cost of factors of production
A fall in the price of other goods; the production of other goods becomes relatively less attractive as their price falls
Technological progress

Conversely

We might see a leftward (or upward) shift in the supply curve if the cost of supply increases. This would mean that at the existing price, a firm's output will decrease and less will be supplied.

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Shifts in the supply curve

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