Question

Which of the following four aspects of demand are defined correctly?
(A) Contraction of Demand: Shift of a demand curve to the left
(B) Expansion of Demand: Increase in demand for a commodity with a decrease in its price
(C) Increase of Demand: Shift of a demand curve to the right
(D) Decrease of demand: Decrease in demand of a commodity with the increase in its price
Choose the correct answer from the options given below:

• (A) only.
• (D) only.
• (A) and (C) only.
• (B) and (C) only.

Hint:

Keep these terms clear:
- Price changes $\rightarrow$ "Expansion" or "Contraction" (Movement along the curve).
- Non-Price changes $\rightarrow$ "Increase" or "Decrease" (Shift of the entire curve).

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
In demand theory, it is crucial to distinguish between:
1. Movement along a demand curve: Caused solely by a change in the price of the commodity itself. This includes expansion (price falls, quantity rises) and contraction (price rises, quantity falls).
2. Shift of a demand curve: Caused by changes in non-price factors (such as consumer income, tastes, and prices of related goods). This includes increase (shift right) and decrease (shift left).

Step 2: Detailed Explanation:
Let us analyze each statement:
- (A) Contraction of Demand: Described as a "Shift of a demand curve to the left."
This is incorrect. Contraction of demand is a movement upward and to the left along the same demand curve. It is not a shift.
- (B) Expansion of Demand: Described as "Increase in demand for a commodity with a decrease in its price."
This is correct. When the price of a good falls, consumers buy more of it. This movement along the curve is called expansion of demand.
- (C) Increase of Demand: Described as "Shift of a demand curve to the right."
This is correct. An "increase in demand" means that at every price level, consumers want to buy more of the good due to non-price factors. This shifts the entire curve to the right.
- (D) Decrease of demand: Described as "Decrease in demand of a commodity with the increase in its price."
This is incorrect. A change in price causes a movement along the curve, which is called a contraction of demand, not a decrease in demand. A "decrease in demand" refers to a leftward shift of the entire curve due to non-price factors.
Thus, only statements (B) and (C) are defined correctly.

Step 3: Final Answer:
The correct option is (D).