How does an increase in supply generally affect consumer prices?

An increase in supply typically leads to a fall in consumer prices due to the fundamental principles of supply and demand in economics. When the supply of a good or service increases, all else being equal, there is more of that good or service available in the market. This greater availability tends to push prices down because sellers are often willing to accept lower prices to attract buyers when there is more competition among sellers.

As the supply curve shifts to the right, the equilibrium price—the price at which quantity supplied equals quantity demanded—drops, resulting in lower prices for consumers. This relationship illustrates the inverse connection between supply and price levels in competitive markets, where excess supply can lead to a reduction in prices, making goods and services more affordable for consumers.

Meanwhile, if demand remains constant while supply increases, the effect on prices becomes even more pronounced, reinforcing the idea that an abundant supply can reduce market prices as sellers strive to sell their excess inventory.