Shifts in supply

The position of a supply curve will change following a change in one or more of the underlying determinants of supply. For example, a change in costs, such as a change in labour or raw material costs, will shift the position of the supply curve.

Rising costs

If costs rise, less can be produced at any given price, and the supply curve will shift to the left.

Falling costs

If costs fall, more can be produced, and the supply curve will shift to the right.

Any change in an underlying determinant of supply, such as a change in the availability of factors, or changes in weather, taxes, and subsidies, will shift the supply curve to the left or right.


Shifts-in-supplyQuantityPriceQPSDS1P1Q1Application of new technology[supply shifts to the right]QuantityPriceQPSDS1P1Q1Shortage of factor inputs[supply shifts to the left]

Go to: subsidies