An increase in supply of a commodity results in a rightward shift of supply curve which lead to decrease in price. It can be explain by diagram as follow - We can explain it with the help of following diagram:
In diagram, demand and supply of good are equal at point E. So E is equilibrium point. At this point OP is equilibrium price and OQ is equilibrium quantity. When supply increases new supply curve 1 1 shifts to right, it shows that at OP price, there is EE2 excess supply. This excess supply results competition among A fall in price results in rise in qua the sellers leading to fall in the price. ll in quantity supplied (contraction of supply). These changes will continue till quantity demanded and supplied are equal at point E1. So E1 is new equilibrium point and OP1is new equilibrium price.
Since OP1< OP which shows that equilibrium price has decreased.
