Shifts in the Supply Curve

Factors that change supply and shift the supply curve include:

• A change in the cost of production. Lower costs, with other things remaining the same, including price, will mean greater profits and so increased supply.
• Technological change. New technology invariably means greater productivity, lower unit costs and increased supply.
• Natural disasters. Floods, bushfires and earthquakes, to name a few, have the potential to severely restrict the supply of certain goods and services.
• Government action. Policies by the government, such as changes to tariffs and subsidies, have the potential to affect the amount supplied by producers. If the supply curve shifts to the right, it indicates an increase in supply at each and every price. A decrease in supply is shown by the supply curve shifting to the left.