Shifts in Market Supply

The supply curve can shift position

If the supply curve shifts to the right, this is an increase in supply; more is provided for sale at each price

If the supply curve moves inwards, there is a decrease in supply meaning that less will be supplied at each price

Make sure that you understand the key factors that can bring about a shift in the supply curve for a product in a market

Key summary

Factors that will cause an outward shift of a market supply curve i.e. an increase in supply

1. The entry of new producers into the market
2. A government subsidy to cover some of the supply costs of firms
3. A fall in the world price of imported components and raw materials
4. A reduction in the size of an indirect tax on producers
5. An improvement in labour productivity which lowers unit labour costs