Question

The fall in supply due to fall in price is called.
(a) Decrease in supply
(b) Increase in supply
(c) Contraction of supply
(d) None of these​

Answer 1

• So there will be competition among sellers, which reduces the price. Price fall leads to a rise in demand and fall in supply. These changes will continue until the new equilibrium is established. Hence, Equilibrium price falls and the equilibrium quantity rises.