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
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