Guide to Referencing

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Movement along the demand Curve

Extension of demand

Extension of demand is the increase in demand due to the fall in price, all other factors remaining constant.

Contraction of demand

Contraction of demand is the fall in demand due to the rise in price, all other factors remaining constant.

extension and contraction of demand

 

Shift in the demand curve

Usually demand curves are drawn based on the assumption except for price all other factors remain the same. But there might be instances when demand may be affected by factors other than price. This will result in the change in demand although the price will remain the same. This change in demand may cause the demand curve to SHIFT inwards or outwards.

  • Shift of demand curve OUTWARDS shows an increase in demand at the same price level. It is known as INCREASE IN DEMAND.
  • Shift of demand curve INWARDS shows that less is demanded at the same price level. It is known as a FALL IN DEMAND.

shifts in demand curve

 

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