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Question
extension of supply and contraction of supply.
extension of supply and contraction of supply.
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Solution
Extension of supply – Extension in supply occurs when the supply of a commodity rises solely as a result of an increase in the commodity’s price. An upward shift to the right on the same supply curve indicates supply extension.
Contraction of supply – A contraction of supply occurs when the supply of a commodity reduces solely as a result of a decrease in the price of that commodity. The downward trend to the left on the same supply curve indicates contraction.
Extension of supply – Extension in supply occurs when the supply of a commodity rises solely as a result of an increase in the commodity’s price. An upward shift to the right on the same supply curve indicates supply extension.
Contraction of supply – A contraction of supply occurs when the supply of a commodity reduces solely as a result of a decrease in the price of that commodity. The downward trend to the left on the same supply curve indicates contraction.
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