Question

Distinguish between extension of demand and increase in demand with the help of diagram.

Answer 1

Difference between extension of demand and increase in demand :

S.No.	Basis of Difference	Extension of Demand	Increase in Demand
1.	Meaning	It is increase in demand due to fall in price when other things remain same.	It is rise in demand due to change in variables other than the price of the commodity.
2.	Demand schedule	There is a single demand schedule.	There is more than one demand schedule.
3.	Movement of the curve	The demand curve moves downward.	The demand curve shifts towards right.
4.	Causes	Decline in price.	Due to rise in income, increase in price of substitute goods and change in taste, increase etc.
5.	Examples	It will be a case of exten­sion of demand if by fall in the price of commodity from Rs. 5 to Rs. 1, the demand increases from 1 unit to 5 units.	It will be a case of increase in demand if the price remains stable at Rs 3 per unit but the demand increases from 3 units to 4 units. It may also happen that the price may increase from Rs. 3 to Rs. 4 but the demand remains constant at 3 units.