Supply function plan

In economics, like demand, change in quantity supplied and change in supply are two different concepts.

• Change in quantity supplied occurs due to rise or fall in product prices while other factors are constant.
• The term, Change in quantity supplied refers to expansion or contraction of supply.

Expansion and Contraction of Supply

• Change in supply refers to increase or decrease in the supply of a product due to various determinants of supply other than price
• The terms, while a change in supply means an increase or decrease in supply

Increase and Decrease In Supply

Distinguish between Expansion of Supply and Increase in Supply

• Expansion of supply refers to a rise in the quantity supplied of a commodity solely due to a rise in its price
• Expansion of supply takes place only due to a rise in the price of a commodity. The other factors remain constant
• Expansion in supply leads to an upward movement on the same supply curve due to rise in price

• When more quantity is supplied at the same price, it is called an increase in supply
• Increase in supply takes place due to a favorable change in other factors. The price of the commodity remains constant
• The supply curve shifts to the right of the original supply curve

Distinguish between Contraction of Supply and Decrease in Supply

• Contraction of supply refers to a fall in the quantity supplied, due to a fall in the price of a commodity, other factors remain constant;
• It is shown a downward movement on the same supply curve

• Decrease in supply refers to a fall in the supply of a given commodity due to unfavorable changes in other factors;
• It is shown by a shift in the supply curve from right to left

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