In economics, what does a rightward shift of the supply curve indicate?

• A. A decrease in supply
• B. An increase in supply
• C. A new demand curve
• D. A stable price level

Answer: (B)

A rightward shift of the supply curve means producers are willing and able to offer more of the good at every price—an increase in supply. This happens when determinants of supply improve, such as better technology that lowers production costs, cheaper inputs, more sellers entering the market, or government support that makes production more attractive. Because the entire curve moves to the right, at the original price there is a larger quantity supplied; as a result, the market tends to see a lower equilibrium price and a higher equilibrium quantity, assuming demand stays the same. This is different from a movement along the curve, which would occur if the price changed. It’s not about a new demand curve, and it doesn’t imply that the price level remains unchanged.