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Question
With the help of a diagram, define a decrease in supply.
Solution
When supply of a commodity falls due to factors other than the price of the commodity, it is called a decrease in supply. Graphically, it implies a leftward shift of the supply curve of the commodity. In the figure, SS is the original supply curve. At OP price, OQ quantity is supplied. Now, when supply decreases, the SS curve shifts to S1S1. Quantity supplied decreases from OQ to OQ1 at the same price of OP.
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