<P> If the demand decreases, then the opposite happens: a shift of the curve to the left . If the demand starts at D2, and decreases to D1, the equilibrium price will decrease, and the equilibrium quantity will also decrease . The quantity supplied at each price is the same as before the demand shift, reflecting the fact that the supply curve has not shifted; but the equilibrium quantity and price are different as a result of the change (shift) in demand . </P> <P> Supply curve shifts: </P> <P> When technological progress occurs, the supply curve shifts . For example, assume that someone invents a better way of growing wheat so that the cost of growing a given quantity of wheat decreases . Otherwise stated, producers will be willing to supply more wheat at every price and this shifts the supply curve S1 outward, to S2--an increase in supply . This increase in supply causes the equilibrium price to decrease from P1 to P2 . The equilibrium quantity increases from Q1 to Q2 as consumers move along the demand curve to the new lower price . As a result of a supply curve shift, the price and the quantity move in opposite directions . If the quantity supplied decreases, the opposite happens . If the supply curve starts at S2, and shifts leftward to S1, the equilibrium price will increase and the equilibrium quantity will decrease as consumers move along the demand curve to the new higher price and associated lower quantity demanded . The quantity demanded at each price is the same as before the supply shift, reflecting the fact that the demand curve has not shifted . But due to the change (shift) in supply, the equilibrium quantity and price have changed . </P> <P> The movement of the supply curve in response to a change in a non-price determinant of supply is caused by a change in the y - intercept, the constant term of the supply equation . The supply curve shifts up and down the y axis as non-price determinants of demand change . </P>

The markets first response to a decrease in supply