Variations in Demand

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Notes

Variations in Demand :

When the demand for a commodity falls or rises due to a change in price alone and other factors remain constant, it is called variations in demand.

It is of two types :

1) Expansion of demand :

Expansion of demand refers to rise in quantity demanded due to fall in price alone while other factors like tastes, income of the consumer, size of population etc. remain unchanged.  Demand moves in downward direction on the same demand curve. This is explained with the help of following figure.

DD is demand curve. A downward movement on the same demand curve from point a to point b indicates an expansion of demand.

2) Contraction of Demand :

Contraction of demand refers to a fall in demand due to rise in price alone. Other factors like tastes, income of the consumer, size of population
etc. remain unchanged. Demand curve moves in the upward direction on the same demand curve.  This can be explained with the help of following figure.

DD is a demand curve. An upward movement on the same demand curve from point a to point b shows contraction of demand.

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