Which of the following would most likely lead to a decrease in demand for a normal good?

• A. An increase in the price of a substitute good
• B. A decrease in the price of the good
• C. A decrease in consumer incomes
• D. An increase in consumer preferences for the good

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the definition of a normal good. A normal good is one for which demand increases when consumer income rises, and demand decreases when consumer income falls.
2. Step 2: Analyze how changes in consumer income affect demand for a normal good. Since demand and income are positively related for normal goods, a decrease in consumer incomes will lead to a decrease in demand.
3. Step 3: Consider the effect of the price of substitute goods. An increase in the price of a substitute good typically increases demand for the normal good, as consumers switch to the relatively cheaper option.
4. Step 4: Examine the impact of a decrease in the price of the good itself. A lower price usually increases the quantity demanded (movement along the demand curve), but this is not a change in demand (shift of the demand curve).
5. Step 5: Evaluate the role of consumer preferences. An increase in consumer preferences for the good will increase demand, shifting the demand curve to the right.