CHANGES IN SUPPLY

                                                CHANGES IN SUPPLY

 When the supply of commodities increases or decreases due to a change in other factors, while the price of a commodity remains constant, is known as a change in supply.

Changes in supply are of two types:

    A)  Increase in supply: increase in supply refers to an increase in quantity supplied due to favorable changes in other factors like income, habits, and taste, while the price is constant.

The supply curve shifts to the right side of the original supply curve indicating an increase in the quantity supplied due to changes in other factors.

 Explanation:

1)  Price P is constant, therefore changes are due to changes in other factors.

2) favourable changes in other factors leads to increase in quantity supplied from OQ to OQ1.

3) increase in supply is shown by shift of supply curve to right side of original supply curve.

B) Decrease in supply: decrease in supply refers to a decrease in quantity supplied due to unfavorable changes in other factors like income, habits, and taste, while the price is constant.

The supply curve shifts to the left side of original supply curve indicating a decrease in the quantity supplied due to changes in other factors.

  Explanation:

1)  Price P is constant, therefore changes are due to changes in other factors.

2) unfavourable changes in other factors leads to decrease in quantity supplied from OQ to OQ1.

3) decrease in supplied is shown by shift of demand curve to left side of original supply curve.