Changes in many factors, other than market price, affect supply behavior. Among the changes that can shift the supply curve are changes in: the cost of materials, the cost of labor, expectations of future supply prices, technology, and, for firms who produce more than one product, the market price of other goods produced by that firm.9 Changes in any of these will change the supply relationship shifting the supply curve.
Law of Supply: All else being equal, if the price of a good or service increases, the desired quantity supplied will increase; If the price of a good or service decreases, the desired quantity supplied will decrease.
By all else being equal, we simply mean that for the Law of Supply to hold, all those other factors that cause a supply shift must remain fixed. The Law of Supply, like the Law of Demand, can only be relied upon to hold if nothing other than market price changes.
There are additional factors that can shift the supply curve. These will be discussed in Section 4.