Extension
and contraction of supply are the changes
in supply due to change in price. The extension of supply takes places when
price rises, and contraction of supply
takes places when price falls.
When
all other things remain unchanged, a price change normally cause a change in
supply, either extension or contraction of supply.
The
changes in price would cause a movement along with the supply curve.
As
price increases from 10 to 15 the quantity supplied also increases from 12 to
18 and supply move along with the curve from point A to point B as shown
in the diagram as extension of supply.
The contraction of supply is also shown below as the price falls from 25
to 20 the quantity supplied will decrease from 30 to 24 along with the
supply curve from the point D to C.