Distinguish between contraction of supply and decrease in supply.… - Vidyadip

Question

Distinguish between contraction of supply and decrease in supply. Explain briefly.

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Answer

Basis	Contraction in Supply (or Decrease in Quantity Supplied)	Decrease in Supply
Meaning	When a lesser quantity is supplied at a lower price, it is called contraction of supply or decrease in quantity supplied	When a lesser quantity is supplied at the same price, it is called decrease in supply.
Cause	It occurs due to fall in 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 leftward shift of supply curve.

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