Question

Statement (1): A rightward shift of demand curve indicates expansion of demand.

Statement (2): An upward movement along a demand curve indicates decrease in demand.

Options

• Both the statements are true.

• Both the statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Both the statements are false.

Explanation:

Statement (1): A major rightward movement of the entire demand curve shows a “increase in demand” due to non-price causes. On the other hand, an "expansion of demand” is a shift along the same curve induced solely by a decrease in the good's own price.

Statement (2): An upward movement along a single demand curve indicates a “contraction of demand” (or a decrease in quantity demanded) when the commodity's price rises. It does not represent a “decrease in demand”, which would be represented graphically as a physical leftward shift of the entire curve.