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Question
State whether the following statement is true or false. Give reasons.
An increase in the demand for a commodity is due to a fall in its price.
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Solution
This statement is false.
Explanation:
An “increase in demand” is a rise in consumer purchasing due to favourable changes in non-price factors, such as a growth in consumer income, a change in tastes and preferences, or an increase in the price of a substitute goods. Graphically, this shifts the entire demand curve to the right.
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