Anonymous
Feb 10, 2024
With the aid of a diagram, distinguish between extension of demand and construction of demand?
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ChatGPT
Feb 10, 2024
Extension of demand refers to an increase in the quantity demanded of a product or service due to a change in its price, while construction of demand refers to the creation of demand for a new product or service in the market.
To illustrate the difference between extension of demand and construction of demand, let's consider the market for smartphones.
Extension of demand can be represented by a movement along the demand curve. Suppose the initial demand for smartphones is represented by the curve D1, where the price of smartphones is P1 and the quantity demanded is Q1. If the price of smartphones decreases to P2, the quantity demanded increases to Q2. This movement along the demand curve from point A to point B represents the extension of demand.
On the other hand, construction of demand can be represented by a shift in the demand curve. Suppose a new feature, such as a highly advanced camera, is introduced in smartphones. This new feature creates a demand for smartphones among photography enthusiasts. As a result, the demand curve shifts outward from D1 to D2. At the initial price P1, the quantity demanded increases from Q1 to Q2. This shift in the demand curve from D1 to D2 represents the construction of demand.
In summary, extension of demand refers to an increase in quantity demanded due to a change in price, represented by a movement along the demand curve. Construction of demand refers to the creation of demand for a new product or service, represented by a shift in the demand curve.
To illustrate the difference between extension of demand and construction of demand, let's consider the market for smartphones.
Extension of demand can be represented by a movement along the demand curve. Suppose the initial demand for smartphones is represented by the curve D1, where the price of smartphones is P1 and the quantity demanded is Q1. If the price of smartphones decreases to P2, the quantity demanded increases to Q2. This movement along the demand curve from point A to point B represents the extension of demand.
On the other hand, construction of demand can be represented by a shift in the demand curve. Suppose a new feature, such as a highly advanced camera, is introduced in smartphones. This new feature creates a demand for smartphones among photography enthusiasts. As a result, the demand curve shifts outward from D1 to D2. At the initial price P1, the quantity demanded increases from Q1 to Q2. This shift in the demand curve from D1 to D2 represents the construction of demand.
In summary, extension of demand refers to an increase in quantity demanded due to a change in price, represented by a movement along the demand curve. Construction of demand refers to the creation of demand for a new product or service, represented by a shift in the demand curve.
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