Expansion or contraction and increase or decrease

Expansion or contraction and increase or decrease - In this...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Expansion or contraction and increase or decrease: Changes in the quantity supplied as a result of movement along the same supply curve has been described by Marshall as rise and fall or expansion and contraction of quantity supplied of the commodity. But if the supply curve shifts left or right of the original curve, the changes in supply of the good are known as increase or decrease . Figure 5 In figure 5 we notice such a shift in the supply curve. On the original supply curve (OS) the quantity of goods supplied at price OP is Oq but when the supply curve shifts towards its left (i.e. S 1 S 1 ) then at the same price OP, the quantity supplied decreases to Oq 1 . If we begin with S 1 S 1 as the original supply curve, OS would represent a shift of the supply curve towards the right.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: In this case, quantity supplied increases at a given price. The supply curve undergoes a shift in it with a change in the technical conditions or the price and supply conditions of the inputs (resources). With improved techniques or methods of production, the degree of the efficiency with which some or all resources can be utilized will increase. This results in a favorable change in the cost of production . Similarly with improved supplies and reduced prices of the inputs, the cost of production tends to fall and an increased supply of a commodity becomes possible at a given market price...
View Full Document

Ask a homework question - tutors are online