What is the effect of a decrease in price on overall market supply?

A decrease in price typically leads to a reduction in the quantity supplied by suppliers. This happens because suppliers often operate under the principle that lower prices reduce profitability. When the selling price of a good or service decreases, some suppliers may find that it is no longer economically viable to produce the same amount of goods, leading them to cut back on the quantity they are willing to supply to the market.

Additionally, suppliers may see a lower price as a signal of decreased consumer demand, which further influences their decision to decrease the quantity supplied. While certain factors, like production costs and external demands, may affect overall market supply in different ways, the immediate response to a price decrease typically results in suppliers supplying less of the good or service.