Differentiate Between the Extension of Demand and an Increase in Demand, Using Diagrams. - Economics

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Distinguish Between

Answer the following question.
Differentiate between the extension of demand and an increase in demand, using diagrams.

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Solution

Basis Expansion in Demand Increase in Demand
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.
Effect on Demand Curve There is a downward movement along the same demand curve. ( See fig). There is a rightward shift ( See fig). in the demand curve.
Reason

It occurs to 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.

Concept: Movement Along and Shifts in the Demand Curve
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2014-2015 (March) Set 1
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