Here is a reversal of the previous situation.
Here the curves have shifted – for whatever reason – making the currently produced quantity (Q1) less than the Equilibrium Quantity.
At the Q1 quantity, Suppliers can charge the Consumers a price of P1 – Generating an Opportunity Profit for the Suppliers.
But an Opportunity Profit is an Incentive to additional investment into Production.
Additional investments generate additional production – new suppliers entering the market, or expansion by the existing suppliers.
Moving the Supplied quantity to the Equilibrium Quantity.
You will have noticed that Price follows Quantity –
Market Competition reduces the price of whatever is Demanded to the lowest Total Economic Cost of Production.
The pressures of production costs move the Quantity Produced back to the Equilibrium Quantity.
