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
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.
Question : The law of demand states that when _____.
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Question : Perfectly inelastic demand occurs when the price elasticity of demand is:
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