Explain the leftward shift in demand …
Posted by Tanya Dehraj 6 months, 2 weeks ago
- 1 answers
Leftward shift of demand curve means decrease in demand. This is caused due to changes in any factor other than the price of its own commodity.
The leftward shift can occur due to the following reasons: -
(i) Decrease in price of substitute good - When there is a decrease in the price of substitute goods, the consumers will start demanding more of the substitue good, as a result demand for our good falls.
For eg. With decrease in price of substitute good (say coffee), demand for the given commodity (say tea) will decrease because the consumer will like to substitute tea for coffee as coffee has become cheaper.
(ii) Increase in Price of complementary good: When price of complementary good (say petrol) rises, the demand for the given commodity (say car) will fall.
(iii) Decrease in the income of the consumer: A fall in income of the consumer will lead to a decrease in demand as there is a direct relationship between income and demand.
(iv) Change in taste: When taste of the consumer shifts against the commodity due to change in fashion or climate the demand of the good falls.
(v) Expectation of future decrease in price: If the consumer expects a fall in the price of a particular commodity in the near future, then he would like to buy lesser quantity of the good.
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