Conversely, if the price of steel decreases, producing a car becomes less expensive. At any given price for

selling cars, car manufacturers can now expect to earn higher profits, so they will supply a higher quantity. The
shift of supply to the right, from S0 to S2, means that at all prices, the quantity supplied has increased. In this
example, at a price of $20,000, the quantity supplied increases from 18 million on the original supply curve
(S0) to 19.8 million on the supply curve S2, which is labeled M.

Other Factors That Affect Supply

In the example above, we saw that changes in the prices of inputs in the production process will affect the cost

of production and thus the supply. Several other things affect the cost of production, too, such as changes in

weather or other natural conditions, new technologies for production, and some government policies.

Changes in weather and climate will affect the cost of production for many agricultural products. For example,
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