Which of the following would likely cause a decrease in demand for a good?

Which of the following would likely cause a decrease in demand for a good?

• A. Increase in consumer income
• B. Decrease in the price of a substitute
• C. Improved consumer tastes
• D. Increased population

Answer: (B)

A decrease in the price of a substitute is likely to cause a decrease in demand for a good because it makes the substitute more attractive to consumers. When the price of a substitute good falls, consumers may choose to buy the cheaper option instead of the original good, leading to a shift in demand away from the original good. This change occurs because consumers generally seek to maximize their utility or satisfaction; with a more affordable substitute available, the incentive to purchase the original good diminishes. In contrast, an increase in consumer income typically leads to an increase in demand for normal goods, as consumers have more purchasing power. Improved consumer tastes generally enhance the attractiveness of a good, leading to greater demand. Additionally, an increased population usually signifies a larger consumer base, which tends to drive up demand for various goods and services due to more potential buyers in the market. Thus, the situation surrounding a decrease in the price of a substitute provides a clear rationale for why demand for the initial good would decline.

A decrease in the price of a substitute is likely to cause a decrease in demand for a good because it makes the substitute more attractive to consumers. When the price of a substitute good falls, consumers may choose to buy the cheaper option instead of the original good, leading to a shift in demand away from the original good. This change occurs because consumers generally seek to maximize their utility or satisfaction; with a more affordable substitute available, the incentive to purchase the original good diminishes.

In contrast, an increase in consumer income typically leads to an increase in demand for normal goods, as consumers have more purchasing power. Improved consumer tastes generally enhance the attractiveness of a good, leading to greater demand. Additionally, an increased population usually signifies a larger consumer base, which tends to drive up demand for various goods and services due to more potential buyers in the market. Thus, the situation surrounding a decrease in the price of a substitute provides a clear rationale for why demand for the initial good would decline.