Which of the following factors is most likely to increase the demand for a good or service?

• A. A decrease in the price of a substitute good
• B. An increase in the price of the good itself
• C. An increase in consumer income (for a normal good)
• D. A decrease in consumer preferences for the good

Answer: (C)

Verified step by step guidance

1. Understand the concept of demand: Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.
2. Recall the factors that shift the demand curve (change demand), not just movement along the curve. These include changes in consumer income, prices of related goods (substitutes and complements), consumer preferences, expectations, and number of buyers.
3. Analyze each option in terms of its effect on demand: - A decrease in the price of a substitute good typically decreases demand for the original good because consumers switch to the now cheaper substitute. - An increase in the price of the good itself causes a movement along the demand curve (a decrease in quantity demanded), not a shift in demand. - An increase in consumer income for a normal good increases demand because consumers can afford to buy more at each price. - A decrease in consumer preferences for the good decreases demand because consumers want less of the good at each price.
4. Identify that the only factor among the options that causes an increase in demand (a rightward shift of the demand curve) is an increase in consumer income for a normal good.
5. Conclude that the correct answer is the factor that increases demand: an increase in consumer income (for a normal good).