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Question
Which of the following statement is true?
Options
When a rise in the price of a commodity leads to decrease in quantity supplied of a commodity, it is called Contraction of Supply.
When a fall in the price of a commodity leads to increase in quantity supplied of a commodity, it is called Contraction of Supply.
When a fall in the price of a commodity leads to decrease in quantity supplied of a commodity, it is called Contraction of Supply.
When a rise in the price of a commodity leads to increase in quantity supplied of a commodity, it is called Contraction of Supply.
Solution
When a fall in the price of a commodity leads to a decrease in the quantity supplied of a commodity, it is called Contraction of Supply.
Explanation:
Contraction in supply can be described as a decrease in quantity provided of a commodity as a result of a decrease in price, i.e., downward movement along the same supply curve.
