Now, imagine that the price of steel, an important ingredient in manufacturing cars, rises, so that producing a

car has become more expensive. At any given price for selling cars, car manufacturers will react by supplying a
lower quantity. We can show this graphically as a leftward shift of supply, from S0 to S1, which indicates that at
any given price, the quantity supplied decreases. In this example, at a price of $20,000, the quantity supplied
decreases from 18 million on the original supply curve (S0) to 16.5 million on the supply curve S1, which is
labeled as point L.

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