Practicing Success
The price and quantity at a point on the demand curve of good are given as 10 and 50 respectively. If the price is changed to 6 and as a result quantity changes to 65, how do you explain the change? |
Increase in demand for the good Decrease in quantity demanded Decrease in demand for the good Increase in quantity demanded |
Increase in quantity demanded |
Changes in the demand for a commodity can be classified in 2 ways:
Change in own price of the commodity cause movement along the demand curve which is also known as change in "Quantity demanded" of the product. Whereas, changes due to other factors than price cause shift in the demand curve which is also known as change in "demand" of the product. In the above question, increase is due to own price of the commodity, thus option 4 will be the correct answer.
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