differentiate between contraction in demand and decrease in demand ?
- Decrease in demand refers to the shift in the demand curve. Contraction refers to movement along the demand curve.
- Decrease in demand leads to a left ward shift of the old curve. Contraction leads to the upward movement on the same demand curve.
- Decrease in demand is due to fall in income of the consumer, fall in price of the substitute good, rise in price of the complementary good, unfavourable changes in consumer's tastes for that particular good. Whereas contraction is due to rise in the price of the same commodity.
- Decrease in demand is known as fall in demand at the same price of the commodity. Whereas contraction is defined as fall in demand due to the rise in price of the same commodity.