CMA Foundation · Fundamentals of Business Economics and Management · Theory of Demand and Supply
Which one of the following will cause an expansion (extension) of quantity demanded of scooters, as distinct from an increase in demand?
A fall in the price of scooters themselves causes an expansion of quantity demanded, because it moves buyers down along the same demand curve. Changes in petrol prices, incomes or motorcycle prices shift the whole curve and are therefore changes in demand.
- AA fall in the price of petrol, a complementary good
- BA fall in the price of scooters themselvesCorrect
- CA rise in consumers' incomes
- DA rise in the price of motorcycles, a substitute
Explanation
An expansion of quantity demanded is a movement down along the same demand curve and is caused only by a fall in the good's own price. The other three events change a determinant other than own price, so they shift the whole demand curve and cause an increase in demand.
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