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Discuss which factor causes the movement along the supply curve? Show graphically.

Discuss which factor causes the movement along the supply curve? Show graphically.

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Answer #1

A supply curve is a graphical representation of supply schedule. A supply schedule lists various prices of commodity and the corresponding quantity supplied.

Thus, a movement along the supply curve is caused by price. This can be further explained with the help of the following diagram.

Here, supply curve is SS .when prices falls from P2 to P1, quantity supplied falls from Q2 to Q1. There is a movement along the supply curve from B to A.Since quantity supplied is decreases as a result of fall in Price, such a movement is called contraction in supply.

Similarly,. when price increases from P2 to P3, quantity supplied increases from Q2 to Q3. There's a movement along the demand curve from B to C.since quantity supplied increases as a result of increase in price, such a movement is called expansion in supply.

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