Question

With the help of a diagram, define an increase in supply.

Answer 1

When supply of a commodity rises due to factors other than the price of the commodity, it is called an increase in supply. This is shown in the diagram. In the figure, SS is the original supply curve. At price OP, the quantity supplied is OQ. Now when supply increases, the supply curve shifts to the right as S₁S₁. Producers are now willing to supply more, i.e., OQ₁ at the same price as OP.