Which of the following changes will increase the demand for bicycles?

• A. An increase in the price of gasoline
• B. A decrease in the price of bicycles
• C. A decrease in consumer income (assuming bicycles are normal goods)
• D. An increase in the price of bicycle helmets (a complementary good)

Answer: (A)

Verified step by step guidance

1. Understand the concept of demand: Demand refers to the quantity of a good that consumers are willing and able to purchase at various prices, holding other factors constant.
2. Identify factors that shift the demand curve: These include changes in consumer income, prices of related goods (substitutes and complements), consumer preferences, and expectations.
3. Analyze the effect of an increase in the price of gasoline: Since gasoline and bicycles can be considered substitutes for transportation, an increase in gasoline prices makes bicycles more attractive, leading to an increase in demand for bicycles.
4. Consider the effect of a decrease in the price of bicycles: This causes a movement along the demand curve (an increase in quantity demanded), not a shift in demand itself.
5. Evaluate the impact of a decrease in consumer income assuming bicycles are normal goods: A decrease in income would reduce demand for normal goods, so demand for bicycles would decrease, not increase.