Question

Supply of a commodity rises due to rise in Price is called ________.

• A. Contraction in Supply
• B. Increase in Supply
• C. Extension in Supply
• D. None of the above

Hint:

Price Change = Extension/Contraction (Movement).
Other Factors Change = Increase/Decrease (Shift).

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Economics distinguishes between a "change in quantity supplied" (movement along the curve) and a "change in supply" (shift of the curve).
Step 2: Detailed Explanation:
1. When the quantity supplied changes due to a change in the price of the commodity itself, it is a movement along the same supply curve.
2. An upward movement along the curve (Price \(\uparrow\), Quantity Supplied \(\uparrow\)) is specifically called Extension or Expansion in Supply.
3. A downward movement (Price \(\downarrow\), Quantity Supplied \(\downarrow\)) is called Contraction in Supply.
4. "Increase in Supply" (Option B) refers to a rightward shift of the entire curve due to external factors like better technology or lower input costs, not the price of the product itself.
Step 3: Final Answer:
The rise in supply specifically caused by a rise in the commodity's own price is defined as Extension in Supply.