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Question : Demand contraction occurs when:

Option 1: Price falls but demand remains stable

Option 2: Price rises and demand also rises
 

Option 3: Price remains stable and demand falls

Option 4:  Price rises and demand falls


Team Careers360 13th Jan, 2024
Answer (1)
Team Careers360 19th Jan, 2024

Correct Answer: Price rises and demand falls


Solution : Contraction in demand appears when price rises and demand falls.
When the quantity demanded falls due to an increase in price while all other factors remain constant, this is referred to as contraction in demand.
Hence option d is the correct answer.

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