CHANGE IN DEMAND

´  CHANGE IN DEMAND
CA AND CS FOUNDATION BUSINESS ECONOMICS
CHANGE IN DEMAND

1.     A CHANGE IN THE QUANTITY OF DEMANDED SHOWS THE EFFECT OF CHANGES IN THE PRICE OF THE COMMODITY ON ITS DEMAND WHILE OTHER DETERMINANTS OF DEMAND LIKE INCOME,TASTE AND PRICE OF RELATED GOODS REMAIN CONSTANT.

2.     THE QUANTITY DEMANDED AT A GIVEN PRICE IS SHOWN BY A POINT ON DEMAND CURVE

3.     CHANGE IN DEMAND IS REFLECTED IN A SHIFT IN THE DEMAND CURVE TO THE EFT OR THE RIGHT

4.     CHANGE IN DEMAND IS NOT CAUSED BY THE THE CHANGE IN THE PRICE OF THE GOOD

·               MOVEMENT ALONG THE DEMAND CURVE REPRESENTS ADJUSTMENT BY CONSUMER TO CHANGES IN THE MARKET PRICE

·               SHIFT IN DEMAND CURVE REPRESENTS ADJUSTMENTS TO OUTSIDE FACTORS

·                CHANGES IN QUANTITY DEMANDED

1.     ALSO KNOWN AS MOVEMENT ALONG THE DEMAND CURVE

2.     EXTENSION AND CONTRACTION OF DEMAND

3.     OTHER THINGS REMAINING THE SAME WHEN THE QUANTITY DEMANDED CHANGES DUE TO CHANGE IN PRICE ONLY

4.     CHANGE IS SHOWN BY DIFFERENT POINTS ALONG THE SAME DEMAND CURVE

5.     FALL IN PRICE IS FOLLOWED BY EXTENSION IN DEMAND

6.     RISE IN PRICE IS FOLLOWED BY CONTRACTION IN DEMAND

·               EXTENSION OF DEMAND

·               EXTENSION OF DEMAND REFERS TO RISE IN QUANTITY DEMANDED AS A RESULT OF FALL IN PRICE OTHER THINGS REMAINING THE SAME.

·               EXTENSION OF DEMAND CURVE

·               D

·               CONTRACTION OF DEMAND

·               CONTRACTION  OF DEMAND REFERS TO FALL IN QUANTITY DEMANDED AS A RESULT OF RISE IN PRICE OTHER THINGS REMAINING THE SAME.

·               CONTRACTION OF DEMAND CURVE

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·               CHANGE IN DEMAND/SHIFT IN DEMAND CURVE

1.     A CHANGE IN ANY DETERMINANT OF THE DEMAND OTHER THAN PRICE WILL SHIFT ENTIRE DEMAND CURVE TO THE RIGHT OR TO THE LEFT

2.     INCREASE IN DEMAND IS SHOWN AS RIGHTWARD SHIFT

3.     A DECREASE IN DEMAND CURVE WILL SHIFT THE ENTIRE DEMAND CURVE TO THE LEFT

·               INCREASE IN DEMAND

·               INCREASE IN DEMAND MEANS RISE IN DEMAND IN RESPONSE TO CHANGES IN OTHER DETERMINANT OF DEMAND OTHER THAN PRICE OF THE PRODUCT. INCREASE IN DEMAND REFERS TO RIGHTWARD SHIFT IN DEMAND CURVE

·                REASON OF INCREASE IN DEMAND:-

1. INCREASE IN INCOME
2. RISE IN PRICE OF SUBSTITUTE GOODS
3. FALL IN THE PRICE OF  COMPLEMENTARY GOODS
4. FAVORABLE CHANGES IN TASTE AN PREFERENCE
5. EXPECTATION OF RISE IN PRICES
6. INCREASE IN DEMAND
   
   
   
   

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·               DECREASE IN DEMAND

·               DECREASE IN DEMAND MEANS FALL IN DEMAND IN RESPONSE TO CHANGES IN OTHER DETERMINANT OF DEMAND OTHER THAN PRICE OF THE PRODUCT. DECREASE IN DEMAND REFERS TO LEFT WARD SHIFT IN DEMAND CURVE

·                REASON OF DECREASE IN DEMAND:-

•                 DECREASE IN INCOME

1.     FALL IN PRICE OF SUBSTITUTE GOODS

2.     RISE IN THE PRICE OF  COMPLEMENTARY GOODS

3.     UNFAVORABLE CHANGES IN TASTE AN PREFERENCE

4.     EXPECTATION OF FALL IN PRICES

5.     DECREASE IN POPULATION

·               DECREASE IN DEMAND

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