Question

Describe movement along the demand curve.

Answer 1

1. Extension of Demand:
   1. Occurs when, other things being equal, a decrease in the price of an item causes an increase in the amount wanted.
   2. This is indicated by a downward shift along the demand curve depicted in the textbook's diagram.
   3. For example, if the price decreases from ₹5 to ₹1, the demand increases from one to five units.
2. Contraction of Demand:
   1. Refers to the situation in which, other things being equal, an increase in the price of an item causes a drop in the quantity desired.
   2. This is represented as an upward movement along the demand curve, as seen in the textbook's example and graphics.
3. Key Characteristics of Movement Along the Demand Curve:
   1. It represents the inverse relationship between price and quantity desired, as stated by the Law of Demand.
   2. It doesn't change the demand curve; rather, it moves along the current demand curve.