Download App

Demand — Economics STD 11 Commerce — Question

Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsDemand3 Marks
Question
Explain expansion and contraction of demand along with diagram.
✓

Answer

  • Increase/decrease in demand takes place when price is assumed constant and determinants other than price varies.
  • Keeping price as constant, if factors/determinants other than price vary there occurs increase/decrease in demand.
  • We take price which is an independent variable on $Y$-axis and demand on $X$-axis. So when price remains fixed i.e. constant, the demand $($on horizontal axis$)$ changes. This causes rightward/leftward shift in the demand curve $DD$.
Rightward shift:
Keeping price factor as constant, if demand increases due to any other factor, the demand curve will shift towards right which is called rightward shift in demand curve.
Leftward shift:
Keeping price factor as constant, if demand decreases due to any other factor, the demand curve will shift towards left which is called leftward shift in demand curve.
Let us take an example to understand the increase and decrease in demand:
The schedule $($table$)$ given below contains data of price of a commodity and its demand at various prices. Note that price $₹ 3$ is constant. A demand curve is plotted for the given data.
Increase and Decrease in Demand
The initial demand is represented by demand curve $D_1 D_1$. Here, at price of $₹ 3$ demand is $3$ units. This is plotted at point 'a' on $D_1 D_1$.
Increase in demand:
When price remains constant at $₹ 3$ but due to one or other factors demand increases to $5$ units, then the demand curve shifts to the right to $\mathrm{D}_3 \mathrm{D}_3$. This is indicated by rightward movement of demand curve from point ' $a$ ' to point ' $c$ '.
Decrease in demand:
  • - At constant price if the initial demand of $3$ units decreases to $1$ unit, the demand curve shifts leftward from point ' $a$ ' i.e. $D_1 D_1$ to point ' $b$ ' i.e. $\mathrm{D}_2 \mathrm{D}_2$.
  • - Thus, more than one demand curves are generated to depict increase or decrease in demand. A rightward shift of the demand curve shows increase. in demand and a leftward shift shows decrease in demand.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "3 Marks Each" from Demand→Demand — all question types→Economics STD 11 Commerce question papers→Gujarat Board STD 11 Commerce question papers→Gujarat Board question paper generator→

Similar questions

Explain Gandhiji's thoughts about decentralized Economy.
→
Give reasons for the direct relation p between the supply and price.
→
Write about the income and expenditure of revenue account of state government.
→
Give function and the sources of income of 'Panchayats'.
→
State the challenges before foreign trade policy of India.
→
Stages of Production Sales Income (₹)Factor Cost (₹)Increasing Value (₹)
Cotton 10000100
Yarn 200100100
Cloth 28020080
Total 580300280

(1) What does the table represent? 
(2) What is the total sales income for all stages of production? 
(3) How is the increasing value calculated at each stage?
→
Explain the concept of long term $($run$)$ average cost curve.
→
Give the meaning of trade cycle and explain the various phases of a trade cycle.
→
Explain: According to Pandit Deendayal limited consumptions the solution to major economic problems.
→
→