Expansion and contraction of supply curve

Movement all along the supply curve or expansion and contraction of supply curve:

Whenever more units are supplied at a higher price, it is termed as ‘expansion of supply’. Whenever fewer units are supplied at lower price, it is termed as ‘contraction in supply’. This is explained in figure shown below:

1830_expansion & contraction supply.jpg


Whenever the price is OP, OA is supplied. Whenever price rises to OP1, the producer will provide OB units. The movement from OA to OB exhibits the extension in supply.

The original price is OP and original supply is OA. Whenever price falls to OP2 then the producer will supply OC units. And the supply contracted from OA to OC.

 

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