Match the following:
| 1. | The demand of car decreased due to rise in its price | A. | Extension of demand |
| 2. | The demand for iPhone reduced due to fall in the income of individual | B. | Contraction of demand |
| 3. | The demand of pen increased due to fall in its price | C. | Increase in demand |
| 4. | The demand for apparel increased due to favourable shift in tastes | D. | Decrease in demand |
Answer & explanation
Correct answer: option 3
The correct answer is option 3: 1-B, 2-D , 3-A, 4-C
| 1. | The demand of car decreased due to rise in its price | B.Contraction of demand | |
| 2. | The demand for iPhone reduced due to fall in the income of individual | D.Decrease in demand | |
| 3. | The demand of pen increased due to fall in its price | A.Extension of demand | |
| 4. | The demand for apparel increased due to favourable shift in tastes | C.Increase in demand | |
Changes in the demand of a commodity can be categorised into 2 categories:
- Shift in the demand curve: When change in the demand is due to change in factors other than the own price of commodity.
- Movement along the demand curve: When change in demand is due to change in the own price of the commodity.
Shift in the demand has two types:
- Increase in demand: When demand rises due to change in other factors like increase in income, favourable shift in tastes etc.
- Decrease in demand: When demand falls due to change in other factors like decrease in income, unfavourable shift in tastes etc.
Movement along the demand curve has two types:
- Extension of demand: When demand rises due to fall in the own price of the commodity
- Contraction of demand: When demand falls due to rise in the own price of the commodity