Increase and Decrease in Demand (Changes in Demand) | Free Economic Blogs
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Increase and Decrease in Demand
Changes in Demand
When demand for commodity increases or decreases due to changes in other factors and price remains constant, it is known as changes in demand.
It is of two types:
1) Increase in demand
It refers to an increase in quantity demanded due to favourable changes in other factors like tastes, income of the consumer, climatic conditions etc. and price remains constant. Demand curve shifts to the right hand side of the original demand curve. This can be explained with the help of fig.
As shown in fig. DD is the original demand curve. Demand curve shifts outward to the right from DD to D1D1 which indicates increase in demand.
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2) Decrease in demand
It refers to decrease in quantity demanded due to unfavourable changes in other factors like tastes, income of the consumer, climatic conditions etc. and price remains constant. Demand curve shifts to left hand side of the original demand curve. This can be explained with the help of fig.
As show in fig. DD is the original demand curve. It shifts inward to the left from DD to D2D2 which indicates decrease in demand.
