1.What is the difference between extension and increase in demand?
2.What is the difference between contraction and decrease in demand?
(any 7 points along with basis)
Answers
Answer:
Difference between extension of demand and increase in demand.
Extension of demand refers to increase in quantity demanded due to decrease in own price of the commodity while increase in demand refers to increase in quantity demanded even when own price of the commodity is constant.
Extension of demand is studied on the assumption that other determinants of demand (other than own price of the commodity) are constant while Increase in demand is studied on the assumption that own price of the commodity is constant.
Extension of demand leads to downward movement along the demand curve from left to right while increase in demand leads to forward shift in demand curve.
Hope this will help you.
Explanation:
Demand increased when price of the product are reduced is the extension of the demand.
Explanation:
When other factors except price are remained constant, with a reduction of price demand of the product increases called extension of the demand. Increase of demand means price tends to be constant and demand is increased.
When other factors except price are remained constant, with an increase in price demand of the products tends to reduce called contraction of demand. Decrease of demand means price tends to be constant and demand is decreased.