To develop your understanding of how changes in costs can happen and the way such changes alter supply, move your mouse pointer over each diagram. Click to study some business examples.

If a business finds that it’s costing more to produce its product, then it will not be willing to produce as much as before. At each market price, less will be produced: the supply curve shifts to the left.

On the other hand, it could be that the cost of producing each product falls. In this case the business has an incentive to produce more: the supply curve shifts to the right.