Differentiate between contraction of demand and decrease in demand, using diagrams.

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Solution

Contraction of demand refers to the increase in own price of the commodity. This is caused by change in own price of the commodity.
Decrease in demand is caused by change in determinants other than own price of the commodity. Causes of decrease in demand include decrease in income, decrease in price of substitute good, change in tastes and preferences against the commodity, etc.

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Similar questions

List-I	List-II
(a) Contraction of Demand	(i) Non-Price change effect
(b) Decrease in Demand	(ii) Demand curve remains the same
(c) Increase in Demand	(iii) Price change effect
(d) Expansion of Demand	(iv) Shifts the Demand curve

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