variation in supply

 VARIATIONS IN SUPPLY

When supply for commodities increases or decreases due to a change in price alone while other factors being constant is known as a variation in supply.

Variation of demand of two types:

1) Expansion of supply: Expansion of supply refers to an increase in quantity supplied due to an increase in the price of commodities, while other things being constant.

Expansion in supply is indicated by the upward movement of supply on the same supply curve.

EXPLANATION:

1) The original price is OP and the Orignal quantity supplied is OQ.

2) As price increases quantity supplied increases from OQ to OQ1.

2) Contraction in supply: Contraction of supply refers to a decrease in the quantity supplied due to a decrease in the price of commodities while other things being constant.    

Contraction in supply is indicated by downward movement on the same supply curve.

 

EXPLANATION:

3) The original price is OP and the Orignal quantity supplied is OQ.

4) As price decreases quantity supplied decreases from OQ to OQ1.