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Shifts of the Supply Curve

The Effects of Changes in Supply and Demand on Equilibrium Price and Quantity: Shifts of the Supply Curve

If all things remain the same, a shift in the supply curve to the left or right with demand remaining unchanged will affect both the equilibrium price and quantity.

Rightward Shift of the Supply Curve:

If the demand curve remains unchanged (DD), a rightward shift of the supply curve (S1S1) will lead to a decrease in the equilibrium market price from P1 to P2 and an increase in the equilibrium quantity from Q1 to Q2 as shown in the figure below:

Figure: Rightward Shift of the Supply Curve

Leftward Shift of the Supply Curve:

On the other hand, if demand remains constant (DD) and the supply curve shifts leftward from SS to S2S2, the equilibrium price will increase from P1 to P2 while the equilibrium quantity will decrease from Q1 to Q2 as illustrated in the figure below.

Figure: Leftward Shift of the Supply Curve

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