Any change in the cost of inputs, like raw materials, machinery, or labor, will affect supply. A cost increase causes a fall in supply at all prices because the good has become more expensive to produce. Supply that falls at all prices can be shown as a shift to the left of a supply curve. A fall in the cost of an input will cause an increase in supply at all price levels. An increase in supply is shown by a shift to the right of the supply curve.

     The government has the power to affect the supply of many goods. A subsidy is a government payment to support a business or market. Since the subsidy lowers producers’ costs, its effect is usually to increase supply. The government can also reduce the supply of some goods by placing an excise tax on them. An excise tax is a tax on the production or sale of a good, making it more expensive to produce. Regulation, or steps the government takes to control production, may also affect supply.

     Another influence on supply is producers’ expectations. If sellers expect the price of a good to rise in the future, they will store goods now and sell more in the future. But if the price of the good is expected to drop, sellers will put more goods on the market immediately. In periods of inflation, or rising prices, producers often try to hold on to goods, reducing supply.