Answer:
D. An increase in the price of a substitute
Explanation:
<h2>Law of Demand</h2>
The law of demand states that as the price of a product of good <u>rises</u>, the <em>quantity demanded </em>for that good or product <u>falls</u>; conversely, if the price of a product or good <u>falls</u>, then the <em>quantity demanded</em> for that good <u>rises</u>.
Given the inverse relationship between the price of a good and the quantity demanded for that good, then its graph will show a <em>downward-sloping</em> demand curve.
A <u>change in demand</u> represents the leftward- or rightward-shift of the entire demand curve. This may be caused by the following factors:
- Changes in the income of buyers
- Changes in consumers' preferences,
- A change in the price of related goods (<em>substitutes</em> and <em>complements</em>),
- Number of buyers within a market, and
- The buyers' expectation on the future prices of goods.
<h3>Types of Related Goods: </h3>
<u>Substitutes</u>: two similar goods that fulfill about the same needs or wants of the buyers.
Examples of substitute goods: Coca-Cola and Pepsi, butter and margarine.
<u>Complements</u>: these are two goods that are consumed together. When the price of one good goes up, the demand for the complement good declines.
Examples of complements: Tennis racket and tennis ball, ink cartridge and printers.
<h2>Answer:</h2><h3><u>Substitute goods:</u></h3>
If the price of one good rises, then the buyers will demand more of the substitute good with a lower price. This causes a rightward-shift on the demand curve of that substitute good.
This description matches <u>Option D</u>: an increase in the price of a substitute.
