Question
Explain the distinction between decrease in supply and contraction in supply. Use diagram.
✓
Answer
| S. No | Basis | Contraction in Supply | Decrease in Supply |
| 1. | Causes | Contraction of supply is caused by fall in price of the given commodity, other things remaining the same. | Decrease in supply is caused by factors other than the price of the commodity, i.e., rise in price of other commodity, technology, rise in price of inputs etc. |
| 2. | Supply curve | Contraction of supply is denoted by downward movement along a supply curve. | Decrease in supply of a commodity is denoted by leftward shift of the supply curve. |
| 3. | Diagram |  |
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