If there is a change in quantity supplied due to a change in the price of the commodity or service, while other factors are held constant; it is known as extension/contraction of supply.
When this phenomenon is represented geometrically, we move from one point to another point along the same curve. Hence extension or contraction of supply is also named as movement along with the supply curve.
Now we discuss changes in Qs in detail:
Extension of Supply
Higher quantity supplied due to higher price of the good or service while other things remaining constant, is known as extension of supply.
Contraction of Supply
Low quantity supplied due to lower price of the good or service while other factors are held constant, is called contraction of supply.
We explain the extension and contraction of supply in the following table and diagram.
In the given figure, we move along the same curve from one point to another point. If we move from left to right along the same supply curve, it is termed as an extension of supply and conversely, if we move from right to left along the same curve, it is known as a contraction of supply.
Extension and contraction of supply have been shown by upward and downward arrows respectively. It should be noted here that extension or contraction of supply appears due to change in endogenous variable i.e. the price of the given commodity or service itself (own price).