The huge fall in the price of natural gas from $14 to $2 per BTU from 2006 to 2013 may have come as a surprise to consumers, but to suppliers it was no surprise at all. Suppliers knew that advances in drilling technology had opened up vast reserves of natural gas that had been too costly to tap in the past. And, predictably, an increase in supply reduces the equilibrium price.

The adoption of improved drilling technology is an example of an event that shifted the supply curve for a good without having an effect on the demand curve. There are many such events. There are also events that shift the demand curve without shifting the supply curve. For example, a medical report that chocolate is good for you increases the demand for chocolate but does not affect the supply. Events often shift either the supply curve or the demand curve, but not both; it is therefore useful to ask what happens in each case.

We have seen that when a curve shifts, the equilibrium price and quantity change. We will now concentrate on exactly how the shift of a curve alters the equilibrium price and quantity.