Distinction between Decrease in demand and Contraction of demand

Distinction between Decrease in demand and Contraction of demand 

 

CONTRACTION OF DEMAND ; Other things remaining the same , when less commodity is purchased due to increase in its price , it is termed as Contraction of demand . It is shown as demand curve moves upwards or leftwards along with the same demand curve.

This can be better understood with the help of table and diagram, just like below;

Example;

Price	10	20
Demand	20	10

Here we see the quantity demand moves from point B to point A along with the same demand curve.

DECREASE IN DEMAND ;  It is the situation when less commodity is purchased due to other factors, not by the price, this term we called Decrease in demand . Did you know what are those other factors that are responsible for decrease in demand, they are; 

• ·         When a fall in consumers income
• 
  
• ·         A fall in the price of a substitute
• 
  
• ·         When the price of a complementary goods rise
• 
  
• ·         Change in taste

This can be understood with help of n example and diagram;

Example;

Price	10	10
demand	20	10

With the help of diagram we see that demand curve shifts from DD to D1,D1 due to other factors not due to price.

 OR

Price	20	10
Demand	10	10

 With the help of diagram we see that demand curve shifts from DD to D1,D1 due to other factors not due to price. 
I HOPE YOU LIKE '

Distinction between Decrease in demand and Contraction of demand THANKS SHARE WITH YOUR FRIENDS. HAVE A NICE LIFE.