Question

Distinguish between contraction in supply and increase in supply of a commodity.

Answer 1

Basis	Contraction in Supply	Increase in Supply
1. Meaning	When a lesser quantity is supplied at a lower price, it is called contraction of supply or decrease in quantity supplied.	When a larger quantity is supplied at the same price, it is called increase in supply.
2. Cause	It occurs due to fall in commodity's own price, other factors remaining unchanged.	It results from changes in factors other than commodity's own price, such as fall in factor prices, fall in prices of other goods improvement in technology etc.
3. Effect on supply curve	It results in downward movement along a supply curve.	It results in rightward shift of supply curve.