The downward movement along the demand curve of a commodity is due to:
Choose the correct option.
Answer & explanation
Correct answer: option 4
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
In the above question, there is extension of the demand.