difference between extension of demand and contraction 5 points each
Answers
Extension of demand refers to overall demand decrease due to non price related factors and demand contraction indicates overall demand decrease due to the same factors
Explanation:
Extension of consumer demand basically refers to the increase or rise in the overall demand in the market due to factors other than market price fluctuations.Some of the causes or attributes in the market include increase in consumer income,increase in price of substitute goods,increase in advertising and marketing of the product/good,changes in people's preference in favor of the particular product/good.All these are non-price factors which lead to an increase in overall demand for any product or service in the market reflected by a rightward shift of the market demand curve.
In the line of same argument,contraction of demand is illustrated by a leftward shift of the market demand curve implying a decrease in the overall demand due to non price related factors in the market.Some of these factors include decrease in consumer income,fall in prices of substitute goods,reduction in overall wealth of the consumers,change in people's preference away from the particular product or service and so forth.Therefore,these are the non price factors which can reduce the overall demand for any good or service in the market which is termed as contraction of demand.