OMTEX CLASSES: Extension of supply and contraction of supply.

Extension of supply and contraction of supply.

Extension of supply and contraction of supply.    


Extension of supply
Contraction of Supply
Meaning
A rise in supply caused by rise in the price while other factors remaining constant is called expansion (extension) of supply.
A fall in supply caused by fall in price while other factors remaining constant is called contraction of supply.
Equilibrium Point:
In expansion in supply, the equilibrium point moves upwards from the left to the right on the same supply curve.

In contraction in supply, the equilibrium point moves downwards from the right to the left on the same supply curve.