# Extension and contraction of demand

The demand for a commodity changes due to a change in price. It is called extension and contraction of demand. When there is decrease in price of commodity there is in increase in demand of that commodity. This is called extension of demand. When there is increase in price of a commodity there is decrease in the demand for that commodity. This called contraction of demand. Thus demand varies in opposite direction due to change in price.

## Extension of demand

There is extension of demand for a commodity when there is decrease in the price of that commodity. When price is 15 dollars the demand is 50 kilograms. When price comes down to 10 dollars there is extension in demand fro m 50 to 60 kilograms.

 Price Demand \$15 50 kg 10 60

The diagram shows extension of demand. Quantity of demand is shown on OX axis. The price is shown on OY axis. DD is demand curve. When price comes down the quantity demanded extends and demand curve moves downward.

## Contraction of demand

There is contraction of demand for a commodity when there is increase in the price of commodity. When price is 10 dollars per kilogram the demand is 40 kilograms. When price increases to 20 dollars there is contraction of demand from 40 to 30 kilograms.

 Price Demand \$10 40 kg 20 30

The diagram shows contraction of demand. Quality of demand is shown on OX axis. The price is shown on OY axis. DD is demand curve. When price increases the quantity demanded comes down and demand curve moves upward.