Difference between Contraction of Supply and Decrease in Supply

Contraction of Supply and Decrease in Supply often seems similar but is different from one another. Contraction of Supply is defined as a decrease in quantity the seller wishes to sell when there is a fall in own price of the commodity. Whereas, a Decrease in Supply is defined as a decrease in quantity the seller wishes to sell due to changes in other factors, other than own price of the commodity.

Contraction of Supply leads to a downward shift in the supply curve, while Decrease in Supply leads to a leftward shift of the supply curve.

What is Contraction of Supply?

When there is a contraction in the quantity supplied of a commodity because of a fall in the commodity’s price by keeping other factors constant, it is known as a Contraction of Supply. The contraction in supply results in a downward movement along the same supply curve.

Price (₹)	Quantity (in units)
15	150
10	100

Here, at ₹15, the seller is willing to sell 150 units of goods; however, at ₹10, the seller is willing to sell 100 units of goods. This scenario shows that the decrease in prices of the goods will lead to a decrease in quantity supplied (other factors remain constant); i.e., Contraction of Supply.

Here, S is the initial supply curve showing the relationship between the quantity supplied and price of the commodity. Quantity Supplied is shown on the Y-axis and Price is shown on the X-axis. When the price falls from ₹15 to ₹10, the quantity supplied contracts from 150 units to 100 units (also known as the Contraction of Supply), which results in a downward movement from B to A along the same supply curve SS.

What is Decrease in Supply?

A decrease in the supply of a commodity due to factors other than the own price of the commodity is known as a Decrease in Supply. In simple terms, the supply for a commodity decreases at the same price, because of changes in other factors, other than own prices of the commodity. A decrease in supply results in a leftward shift in the supply curve.

Price (₹)	Quantity (in units)
15	75
15	50

Here, at ₹15, initially, the seller is willing to sell 75 units; however, at the same price of ₹15, the seller is willing to sell 50 units of commodity. This decrease in supply is caused by changes in other factors of supply, other than own price of the commodity.

Here, the quantity supplied is shown on the X-axis and price is shown on the Y-axis. S₁S₁ is the initial supply curve showing 75 units of quantity supplied at ₹15. An increase in supply from 75 units to 50 units at the same price of ₹15, causes a leftward shift in the supply curve from S₁S₁ to S₂S₂.

Difference between Contraction of Supply and Decrease in Supply

Basis	Contraction of Supply	Decrease in Supply
Meaning	A decrease in quantity supplied due to a decrease in price while all other factors remain constant is known as Contraction of Supply.	A decrease in supply as a result of a change in variable other than the commodity’s price is known as a Decrease in Supply.
Effect on Supply Curve	It results in a downward movement in the same supply curve.	It results in a shift in the supply curve in the leftward direction.
Reason	It happens due to a decrease in the price of the given commodity.	It occurs as a result of other factors, such as a decrease in the price of substitute and complementary goods, a decrease in income levels, etc.