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Questions
Differentiate between decrease in demand and contraction of demand.
Distinguish between contraction of demand and decrease in demand and show it diagrammatically.
Distinguish between contraction in demand and decrease in demand.
Distinguish Between
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Solution
| Sr. No. | Decrease in Demand | Contraction of Demand |
| 1. | This is caused by a change in determinants other than the own price of the commodity. | This is caused only by a change in the own price of the commodity. |
| 2. | These include a decrease in income, a decrease in the price of the substitute goods, an increase in the price of the complementary goods, and a change in taste and preferences against the commodity. | An increase in the price of the commodity is the only cause. |
| 3. | Diagrammatically, this is shown as a backward shift in the demand curve. | Diagrammatically, this is shown as an upward movement (right to left) on the same demand curve. |
| 4. |  |
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Notes
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