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Theory of consumer behaviour — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsTheory of consumer behaviour4 Marks
Question
Explain the difference between decrease in demand and decrease in quantity demanded. Give two causes of decrease in demand.
✓

Answer

Decrease in demand: Decrease in demand is due to change in factors other than price of the given good, e.g., decrease in income (normal good), unfavourable change in tastes etc.

Decrease in quantity demanded: Decrease in quantity demanded is due to rise in own price of the given commodity.

Two causes of decrease in demand are:

  1. Fall in the price of substitute goods: The demand for a good falls with the fall in the price of its substitute good. As a result, the demand curve for the commodity shifts to the left with the fall in the price of its substitute good.

$\text{P}_\text{Y}\downarrow\{\text{D}_\text{Y}\uparrow\}\text{D}_\text{X}\downarrow$

  1. Rise in the price of the complementary good: As a result, there is a decrease in the demand.

$\text{P}_\text{Y}\uparrow\{\text{D}_\text{Y}\downarrow\}\text{D}_\text{X}\uparrow$

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