Contraction of supply is when the supply of a commodity decreases due to fall in its price and other things being constant. It is caused by fall in the price of the commodity. There is a downward movement from $A$ to $B$ as shown in the diagram along the supply curve which is due contraction of supply. It is explained in the given diagram, as with a fall in price from $O P$ to $OP_1$ , quantity supplied falls from $OQ$to $OQ_1$ .