Question
Differentiate between decrease in supply and contraction in supply (decrease in quantity supplied).
✓
Answer
|
S. No.
|
Basis
|
Increase in Supply
|
Expansion in Supply
|
||
|
1.
|
Meaning
|
Decrease in Supply A decrease in supply means that producers now supply less at a given price level.
|
Contraction in Supply It states that fall in quantity supplied due to the fall in price of the commodity.
|
||
|
2.
|
Cause
|
It states that fall in quantity supplied due to the fall in price of the commodity.
|
It is caused by rise in price of the commodity.
|
||
|
(ii) Rise in the prices of other goods.
|
|||||
|
(iii) When the technology becomes outdated.
|
|||||
|
(iv) Change in objective of producer (decrease supply at the same price).
|
|||||
|
(v) Taxation policy of government rises.
|
|||||
|
3.
|
Schedule
|
Price
|
Supply
|
Price
|
Supply
|
|
4
|
10
|
2
|
1
|
||
|
4
|
8
|
1
|
8
|
||
|
4.
|
Diagram
|
 |
 |
||
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
Explore more
Similar questions
Suppose the demand and supply curve of commodity X in a perfectly competitive market are given by:$\text{q}^\text{D}=700-\text{p}$
$\text{q}^\text{s}=500+3\text{p for p}\geq15$
$=0\text{ for }0\leq\text{p}<15$
Assume that the market consists of identical firms. Identify the reason behind the market supply of commodity X being zero at any price less than $Rs. 15$. What will be the equilibrium price for this commodity? At equilibrium, what mquantity of X will be produced?
→$\text{q}^\text{s}=500+3\text{p for p}\geq15$
$=0\text{ for }0\leq\text{p}<15$
Assume that the market consists of identical firms. Identify the reason behind the market supply of commodity X being zero at any price less than $Rs. 15$. What will be the equilibrium price for this commodity? At equilibrium, what mquantity of X will be produced?
Distinguish between decrease in demand and decrease in quantity demanded.
Perfectly competitive firms are considered as more efficient than monopolies. Do you agree?
Suppose a consumer wants to consume two goods which are available only in integer units. The two goods are equally priced at Rs $10$ and the consumer's income is Rs $40$.
→- Write down all the bundles that are available to the consumer.
- Among the bundles that are available to the consumer, identify those which cost her exactly Rs $40$.
Explain how changes in prices of other products influence the supply of a given product.
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
| Quantity | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| Marginal Revenue | 10 | 6 | 2 | 2 | 2 | 0 | 0 | 0 | -5 |
Complete the following cost schedule:
| Quantity (in Units): | 0 | 1 | 2 | 3 | 4 |
| Total cost (in ₹): | 200 | ... | ... | ... | 490 |
| Total variable cost (in ₹): | 0 | ... | 180 | ... | ... |
| Average variable cost (in ₹): | - | 100 | ... | 80 | ... |
Explain law of statistical regularity and law of inertia of large numbers in short.
Explain two points of distinction between monopoly and monopolistic competition.
A decline in the price of good X by ₹ 5 causes an increase in its demand by 20 units to 50 units. The new price is ₹ 15. Calculate elasticity of demand.