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When a fall in market price leads producers to offer less for sale, moving down along the same supply curve, this is best described as:
Aa decrease in supply
Ba contraction of supply
Ca leftward shift in supply
Da rise in producer surplus
Answer & Solution
Correct answer: B. a contraction of supply
1. The change is driven by the good's own price falling.
2. Own-price changes give a movement along the curve, not a shift.
3. A downward movement to less quantity is called a contraction.
4. A 'decrease in supply' or 'leftward shift' would need a non-price cause, so they are ruled out.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit III "Supply", p.4_
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