An increase in demand for a good can be caused by
A) a decrease in the price of a substitute good.
B) a reduction in income if the good is a normal good.
C) a decrease in the price of a complementary good.
D) an increase in price of a complementary good.

Question

Quizplus · Accepted Answer

When the price of a complementary good decreases, the demand for the good in question increases. For example, if the price of hot dogs (complementary good) decreases, the demand for hot dog buns will increase. Therefore, option C is the correct answer.

Option A is incorrect because if the price of a substitute good decreases, then the demand for the good in question is likely to decrease.

Option B is also incorrect because if the income of consumers decreases, then the demand for a normal good is likely to decrease.

Option D is incorrect because if the price of a complementary good increases, then the demand for the good in question is likely to decrease.

An Increase in Demand for a Good Can Be Caused