What is increase in supply? GROUP: B Short answer questions 4x5=20

Increase in supply refers to a situation where producers are willing to offer more quantity of a good or service for sale at the same price level over a given period. This occurs due to factors such as:

Movement *along* the supply curve (not an increase in supply) due to price change (P₁ constant, Q₁ → Q₂).

Rightward shift of supply curve (S₁ → S₂) due to increased supply, leading to new equilibrium (E₂) with higher quantity (Q₂) and lower price (P₂).

Technological advancements (lower production costs).
Favorable weather conditions (for agricultural products).
Lower input prices (raw materials, labor).
Government policies (subsidies, tax reductions).
Expectations of future price declines (encouraging current production).

Graphically, an increase in supply is represented by a rightward shift of the entire supply curve, while a movement along the supply curve (due to price changes) is not considered an increase in supply. This shift leads to a new equilibrium with higher quantity and possibly lower price in the market.

Discussion

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