Question

Distinguish between contraction and decrease in supply.

Distinguish between decrease in supply and contraction of supply with the help of suitable diagrams.

In what ways does contraction in supply differ from decrease in supply?

Answer 1

Sr. No.	Contraction of Supply	Decrease in Supply
1.	Contraction of supply refers to a decrease in the quantity supplied of a commodity at a lower price.	A decrease in supply indicates a lesser quantity being provided at the same price.
2.	This reduction is a result of the commodity’s own price decline.	It arises from alterations in factors unrelated to the commodity’s own price.
3.	It involves downward movement along the same supply curve.	It results in the leftward shift of the supply curve.

Answer 2

Basis	Contraction in Supply	Decrease in Supply
Meaning	When a lesser quantity is supplied at a lower price, it is called a contraction of supply or a decrease in quantity supplied.	When a lesser quantity is supplied at the same price, it is called a decrease in supply.
Cause	It occurs due to a fall in the commodity’s own price, other factors remaining unchanged.	It occurs due to change in factors other than commodity’s own price, such as increase in factor prices, rise in price of other goods, fall in the number of firms, etc.
Effect on supply curve	It results in downward movement along a supply curve.	It leads to a leftward shift of the supply curve.
Diagram