Page 51 - VIRANSH COACHING CLASSES

In figure 4.6, quantity supplied is shown shifts to the right of the original supply
on the X axis and price on the Y axis. Quantity curve. It is shown in figure 4.8
supplied rises from OQ to OQ , with a rise in Increase in supply
1
price from OP to OP , resulting in an upward SS = Original supply curve
1 Y
movement from M to N along the same supply S S = Shift in supply curve
1 1
curve SS. It is known as Expansion of supply.

2) Contraction of supply : Contraction of S
supply refers to a fall in the quantity supplied, S 1
due to fall in the price of a commodity, Price P M N
other factors remaining constant. In case of S
contraction of supply, there is a downward S
movement on the same supply curve. It is 1
shown in figure 4.7 0 Q Q 1 X
Contraction of supply Quantity Supplied
Fig. 4.8
Y SS = Supply Curve
NM = Contraction of Supply In figure 4.8, quantity supplied is shown on
the X axis and price on the Y axis. Supply rises
from OQ to OQ at the same price OP, resulting
1
in an outward shift of the original supply curve to
Price P N S the right from SS to S S . It is known as Increase
1 1
in supply.
M
P
2 2) Decrease in supply : Decrease in supply
S
refers to a fall in the supply of a given
0 Q Q X
2 commodity due to unfavourable changes in
Quantity Supplied other factors such as increase in the prices
Fig. 4.7 of inputs, increase in tax rate, outdated

In figure 4.7, quantity supplied is shown technology, strikes by worker, while price
on the X axis and price on the Y axis. Quantity remains constant. The supply curve shifts
supplied falls from OQ to OQ with a fall in to the left of the original supply curve. It is
2
price from OP to OP , resulting in a downward shown in figure 4.9
2
movement from N to M on the same supply curve Decrease in supply
SS. It is known as Contraction of supply. Y SS = Original supply curve
S S = Shift in supply curve
Changes in Supply : 2 2 S
2
When other factors change and price remains M
constant, it is known as changes in supply. There P N S
are two types of changes in supply : Price S
1) Increase in supply : Increase in supply refers 2
to rise in the supply of a given commodity
S
due to favourable changes in other factors
such as fall in the price of inputs, fall in tax 0 Q 2 Q X
rates, technological upgradation etc., while Quantity Supplied
price remains constant. The supply curve Fig. 4.9

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