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Question
Differentiate between the expansion of demand and an increase in demand, using diagrams.
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Solution
| Sr. No. | Basis | Expansion in Demand | Increase in Demand |
| 1. | Meaning | When the quantity demanded rises due to a decrease in the price. Keeping other factors constant, it is known as an expansion in demand. | When the demand rises due to a favorable change in the other factors, at the same price, it is known as an increase in demand. |
| 2. | Effect on Demand Curve | There is a downward movement along the same demand curve. | There is a rightward shift in the demand curve. |
| 3. | Reason | It occurs with a decrease in the price of the given commodity. |
It occurs due to a favorable change in the other factors, like an increase in the prices of substitutes, a decrease in the prices of complementary goods, an increase in income in the case of normal goods, etc. |
Notes
It occurs to decrease in the price of the given commodity.
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