Question
Economics Question on Consumer behaviour
Ms Stuman's real income rises as a result of a fall in the price of sugar in the market. As a result, she now purchases more quantity of sugar than before. This phenomenon will be termed as:
A
Increase in demand
B
Decrease in demand
C
Expansion in demand
D
Contraction in demand
Answer
Expansion in demand
Explanation
Solution
When the price of a good decreases and the quantity demanded increases, the phenomenon is termed ”expansion in demand.” In this case, Ms Stuman’s purchasing power increases as sugar becomes cheaper, leading her to buy more of it. This is distinct from an increase in demand, which typically refers to a shift of the entire demand curve due to factors other than price.