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 $\mathit{A}$ to $\mathit{B}$ 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 $\mathit{O}\mathit{P}$ to ${\mathrm{OP}}_1$ , quantity supplied falls from $\mathrm{OQ}$to ${\mathrm{OQ}}_1$ .