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Other things being equal, what causes a decrease in demand?

  • A.rise in the price of the substitute
  • B.fall in the price of the commodity
  • C.rise in the income of the consumer
  • D.rise in the price of the commodity

Answer: B

Correct answer: rise in the price of the commodity

Take the options against the law of demand and against what shifts the demand curve. A rise in the commodity's own price reduces the amount buyers take, which is the only decrease among the four.

A fall in its price does the opposite, raising the quantity demanded. A rise in the price of a substitute pushes buyers towards this good and increases demand for it. A rise in consumer income increases demand for any normal good. Note that the own-price change moves along a given demand curve while the other two shift the curve itself - a distinction worth keeping, though either way only one option reduces the amount bought.

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