# How to Read Shifts in the Supply Curve

The quantity of an item that either an individual firm or a market of firms supplies is determined by a number of different factors. The supply curve represents the relationship between price and quantity supplied, with all other factors affecting supply held constant. What happens when a determinant of supply other than price changes, and how does this affect the supply curve?

## The Supply Curve

When a non-price determinant of supply changes, the overall relationship between price and quantity supplied is affected. This is represented by a shift of the supply curve.

## An Increase in Supply

An increase in supply can be thought of either as a shift to the right of the demand curve or as a downward shift of the supply curve. The shift to the right shows that, when supply increases, producers produce and sell a larger quantity at each price. The downward shift represents the fact that supply often increases when the costs of production decrease, so producers don't need to get as high of a price as before in order to supply a given quantity of output. (Note that the horizontal and vertical shifts of a supply curve are generally not of the same magnitude.)

Shifts of the supply curve need not be parallel, but it's helpful (and accurate enough for most purposes) to generally think of them that way for the sake of simplicity.

## A Decrease in Supply

In contrast, a decrease in supply can be thought of either as a shift to the left of the supply curve or as an upward shift of the supply curve. The shift to the left shows that, when supply decreases, firms produce and sell a smaller quantity at each price. The upward shift represents the fact that supply often decreases when the costs of production increase, so producers need to get a higher price than before in order to supply a given quantity of output. (Again, note that the horizontal and vertical shifts of a supply curve are generally not of the same magnitude.)

## Shifting the Supply Curve

In general, it's helpful to think about decreases in supply as shifts to the left of the supply curve (i.e. a decrease along the quantity axis) and increases in supply as shifts to the right (i.e. an increase along the quantity axis). This will be the case regardless of whether you're looking at a demand curve or a supply curve.