Question

If demand for a commodity x rises from 150 units because of a fall in its price from ₹ 25 to ₹ 15 per unit, then:

(i) It leads to a downward movement along the same demand curve.
(ii) It leads to an upward movement along the same demand curve.
(iii) It is known as Expansion in Demand.
(iv) It is known as Contraction in Demand.

Options

• (i) and (iii)

• (ii) and (iii)

• (ii) and (iv)

• (i) and (iv)

Answer 1

(i) and (iii)

Explanation:

A fall in the commodity’s own price increases quantity demanded. This is expansion in demand and is shown by a downward movement along the same demand curve; therefore, statements (i) and (iii) are correct.