 module 51, supply-response-relation. Change in supply might be because of supply-response-relationship. When we talk about supply-response-relationship, it basically relates quantity-supply and price. It basically depicts an association between quantity-supply and price while keeping other things constant. And whenever there is change in product price, it results in a movement along the supply curve. And beside this movement along the supply curve, there is also a shift in supply curve because of change in price of that commodity. This resulting increase in output basically has two effects. One is the effect which you call movement along the supply curve and another effect in which we say supply curve shifts from one position to another. Now to elaborate this, suppose we are showing you a supply curve in this diagram. In this supply curve, what is S naught? This is the original supply curve that depicts association between price and quantity supply. If price of commodity is P1, then producer is willing to produce Q1 quantity of that particular commodity. If we talk about price of commodity increases from P1 to P2, then producer should supply Q2 quantity of that particular commodity. But because of that increase in price, there is also a shift in supply curve from S naught to S n. Because of increase in price, it might be possible for producer it is convenient to use some other technology to carry out the production of that particular commodity. So instead of increase in output from Q1 to Q2, because of increase in price, there is increase in output from Q2 to Qn. And this movement here from point C to point D instead of original supply curve to a new supply curve, it in fact has two effects. One effect is the movement along the supply curve. There is increase in quantity supply because of increase in price of that particular commodity. And the other effect is improvement in quantity supply because of improvement in production process. And now if we assume that the price of commodity decreases, that price moves from P2 to P3, it should move towards now original supply curve. But this will not happen. Now whose movement will be along? The movement will be along the new supply curve. Whatever investment any producer had to do to use some new technology to carry out the production he will stay there. Because of decrease in price, there is decrease in quantity supply along new supply curve. The quantity supply will move against P3, quantity supply will be equal to Qn3. Now why is this happening? Whenever the price increases, because of new technologies are more likely to be adopted. When the price increases, because of increasing the price, what will happen for the producer? It is convenient to adopt some new technology. And when the new technology adapts, he will retain that production, he will retain that technology to carry out the production of output even when there is a decrease in price in subsequent time periods. The investment he made will remain there, even when our price decreases. Now the magnitude of net response to price decline, it is always less than the magnitude of net response to price increase. To increase in output because of increase in price of that commodity is always greater than decrease in output because of decrease in price of output. And what do you call this movement? It always results in movement along new supply function. If we summarize all this, then supply response relationship will be because of increase in price of commodity. There is not only movement along the supply curve, there is also a shift in supply of the commodity. And the shift in supply, what will it refer to? It will refer to increase in supply. If we talk in the reference of agricultural commodities, that if price increases, what will the farmer do? It might be possible he use some other technique of production. Because of that usage of other technique of production, he made an investment. In which form? Maybe in the form of usage of more fertilizer. He decided that if price increases, to increase the output, he will have to use fertilizer. He has developed a habit of that. Even when price decreases, what will happen? His supply function which will move at the new level, will carry out against his production.