A company that produces peanut butter is also equipped to make almond butter. The company noticed that the prices of almond butter are rising. So, what will happen to the supply of peanut butter, and what will happen to the supply of almond butter? Let's start with what will happen to the supply of peanut butter. We know they are substitutes in production. They made reference in the question that they are also equipped to make almond butter, so we know that the price of almond butter is rising. Since the price of almond butter is rising, the company won't make peanut butter anymore. They're going to say, "I'd rather make almond butter than peanut butter." So, they're going to switch their production; they're going to substitute making almond butter instead. So the supply is going to go down for peanut butter. Alright. Let's go ahead and do this on the graph. In the market for peanut butter, this was a bad thing for peanut butter because they're going to prefer to make almond butter instead. So, we are going to have a shift to the left. I'm going to draw a new demand, new supply curve here to the left of this one, and that will be our shift to the left for peanut butter. Cool?
Alright, let's try the same thing with almond butter. Now, let's think about this. So, we've had a price increase in almond butter, and hopefully, you guys remember this trick from when we were studying demand, but we are talking about the supply of almond butter and all that has happened is a price change of almond butter. So, nothing else has happened in the market for almond butter other than the price has increased. We’re not going to draw a new supply curve. We are actually just moving along the supply curve. This is our quantity axis. We had a price here and a quantity here and it told us that the price of almond butter increased. So now we’ve got a price up here. Oops. And the quantity out here. The price increase goes along with our law of supply that since the price of the product increased, the quantity supplied is going to increase as well. Hopefully, that one didn't catch you because we’ve had a couple of tricks like that already when we were studying demand and if it did, make sure you really focus on that. Changes in the price of a product are only going to shift us along the line. Alright, cool. Let's move on to the next topic.