An Increase in Supply

Supply changes for any of the four reasons listed in the previous section.

An increase in supply This diagram shows a downward sloping demand curve and an upward sloping supply curve. They intersect at point A. When the supply curve shifts to the right, then the equilibrium point, point B, is lower. This means that the price has dropped. Point B is also to the right of point A. This means that the equilibrium quantity has increased.is illustrated by a rightward shift of the supply curve. This decreases the price and increases the quantity sold.
A Decrease in Supply

A decrease in supply is illustrated by a leftward shift of the supply curve. This increases the price and decreases the quantity sold.