Difference between Extension of Demand and Increase in Demand

 

  Basis

    of

Difference

 

   Extension of Demand

 

  Increase in Demand

Meaning

When quantity demand for a commodity rises due to fall in the price, keeping other factors as constant is called an extension of demand.

When demand for commodity increases due to change in other factors, keeping price as constant is called an increase in demand.

Cause

Fall in price of the 

commodity.

Several causes:

a. Increase in price of the substitute goods.

b. Decrease in price of the complementary goods.

c. Increase in income in case of normal goods.

d. Favorable tastes and preferences are developed.

Effect on Demand curve

It is shown as movement from

left to right on the same 

demand curve.

It is shown as  forward or rightward 

shift in the demand curve.

Concept

It is a quantity demand 

concept.

 It is a demand concept.

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