Question

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

Answer 1

When supply of a commodity rises due to factors other than price of the commodity, it is called 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, supply curve shifts, to the right as S₁S₁. Producers are now willing to supply more, i.e., OQ₁ at the same price of OP.