1) Change in Quantity demanded
When the amount
demanded of a commodity changes (rises/falls) as a result of change in its own
price, while other determinants of demand (like income, tastes and preferences
etc.) remain constant, it is known as change in quantity demanded.
They are of two types:
They are of two types:
a) Extension of demand :
When the quantity demanded of a commodity rises due to fall in its price, other things remaining the same (i.e. factors that affects demand like income,tastes and preferences etc), it is called ‘rise in quantity demanded’ or ‘extension of demand’.
When the quantity demanded of a commodity rises due to fall in its price, other things remaining the same (i.e. factors that affects demand like income,tastes and preferences etc), it is called ‘rise in quantity demanded’ or ‘extension of demand’.
b) Contraction of demand :
When the quantity demanded of a commodity falls due to rise in its price, other things remaining the same (i.e. factors that affects demand like income,tastes and preferences etc), it is called ‘fall in quantity demanded’ or ‘contraction of demand’.
When the quantity demanded of a commodity falls due to rise in its price, other things remaining the same (i.e. factors that affects demand like income,tastes and preferences etc), it is called ‘fall in quantity demanded’ or ‘contraction of demand’.
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| demand curve |
As explained in the above graph,when the
price is OP, quantity demanded is OQ.
When the price rises to OP1,
quantity demanded falls to OQ1.
This movement from A to B in upward direction on the demand curve DD is the contraction of demand,since quantity demand falls (contracts) due to rise in price.
This movement from A to B in upward direction on the demand curve DD is the contraction of demand,since quantity demand falls (contracts) due to rise in price.
