Question

Explain causes of leftward shift in demand curve of a commodity.

Answer 1

A leftward shift is a decrease in demand: consumers demand less at every price because of an unfavourable change in a factor other than the commodity’s own price. Causes include:

1. A fall in the price of a substitute good.
2. A rise in the price of a complementary good.
3. A fall in income, if the commodity is a normal good.
4. A rise in income, if the commodity is an inferior good.
5. A change in tastes or preferences against the commodity.
6. An expectation that its price will fall in the future, which may lead consumers to postpone purchases.
7. A fall in population or a change in its composition that reduces the number of likely buyers.

A leftward shift means less demand at the same price; it is different from contraction caused by a rise in the commodity’s own price.