what you mine by contraction and extraction supply with help of the diagram
Answers
Explanation:
The term extension and contraction in supply is used for changes in quantity supplied as a result of changes in price of a commodity. When the rise in price of a commodity brings about increase in quantity supplied of the commodity, while other factors determining supply remaining constant, this is called Extension in Supply. From the given figure of extension in supply, it is clear that if price of commodity is Rs. 2 per unit, the quantity supplied is 10 kg. Now, if price rises from Rs. 2 to Rs 10, the quantity supplied increases from 10 to 30 units. This is extension of supply. Likewise, from the given figure of contraction of supply, it is clear that when price reduces from Rs.10 to Rs. 2, the quantity supplied reduces from 30 units to 10 units only. This has been shown by movement from B to A.
