To develop your understanding of how changes in technology can alter supply, move your mouse pointer over each diagram. Click to study a business example.

If new technology is introduced, and this technology increases productivity, the cost of producing each product will fall. Each business using this technology will be willing to produce more than before. At each market price, more will be produced: the supply curve shifts to the right.

On the other hand, it could be that the new technology doesn’t increase productivity i.e it actually reduces output per worker. In this case production costs per item will increase and less will be produced: the supply curve shifts to the left.