Learning Contents:                                                             ·             Extension of supply ·             Contraction of supply Introduction As the Law of supply states, other things remaining constant, when the price of a commodity rises, sellers are willing to sell more of it; if price of a commodity falls, they sell less of it. Therefore, price may either go up or down and this causes the seller to sell either more or less of a commodity respectively. Movements along the supply curve means moving ‘up or down’ the supply curve. When price becomes the only reason for a change in the supply for a commodity, it is called as the movements along the supply curve. Such movements along the supply curve are known as extension of supply (upward movement ) and contraction of supply ( downward movement).   A movement along the supply curve is also known as change in the quantity supplied for a commodity. The change in quantity supplied is classified into tw

Learning Contents:   Factors affecting supply of the commodity                                                     Supply refers to the quantity of the commodity that a seller is willing and able to sell at different possible prices during a particular point of time. The quantity of the commodity that a firm sells is not only affected by the price of the commodity but other factors such as price of related goods, cost of production, objective of the firm, etc. Therefore, the supply function shows the functional relationship between the quantity supplied; price and the various factors affect the supply of the commodity. The supply of a commodity is a function of various factors stated in an equation below: S x =f (P X , P r , O, G P , T, S, P F , E, I, P W, N D )   Here, S x  = Supply for Commodity X; P X  = Own price of the given Commodity x; P r  = Prices of Related Goods; O = Objective of the firm; G P = Government policies; T = Technological improvements; N = Number of selle

 Hi Learner, Thanks for writing your query! Please find the solved answers of your questions. We are always happy to help the true learners.  Pls. Let us know if we can help you further! Sending wishes to you 😊 Work hard.... Work Better....  Keep learning.... Keep Improving.... Questions for Practice: 1. Suppose the price of a commodity falls from ₹6 to ₹4 per unit and due to this quantity demanded of the commodity increases from 80 units to 120 units. Find out the price elasticity of demand Solution: Following information is given:   Q = 80 units   Q 1 = 120 units   ΔQ =Q 1 -Q       =120-80       = 40   P = ₹6   P 1 = ₹4 ΔP = P 1 -P      = 4-6      = -2                                              E d =?   Note :   (-) negative sign is prefixed to the formula because price and demand are inversely related. Doing this would bring the value of elasticity of demand