Under perfect competition, a rightward shift of the market supply curve could be caused by

For one thing, markets rarely operate without outside influences. Things are much more complex in the real world.

But we must be aware that this is a very simplistic example. What have we learned in this discussion? We’ve learned that without outside influences, markets in an environment of perfect competition will arrive at an equilibrium point at which both buyers and sellers are satisfied. If, on the other hand, a farmer tries to charge less than the equilibrium price of $0.60 a pound, he will sell more apples but his profit per pound will be less than at the equilibrium price. If a farmer tries to charge more than $0.60 for a pound of apples, he won’t sell very many and his profits will go down.

Thus, $0.60 is the equilibrium price: at this price, the quantity of apples demanded by buyers equals the quantity of apples that farmers are willing to supply. You can see in Figure 1.8 “The Equilibrium Price” that the supply and demand curves intersect at the price of $0.60 and quantity of two thousand pounds.

Under perfect competition, a rightward shift of the market supply curve could be caused by