How do the substitution effect and income effect explain the law of demand when the price of a good increases?

• A. Consumers buy the same amount of the good because substitution and income effects cancel each other out.
• B. Consumers buy less of the good because they substitute it with cheaper alternatives and their real income decreases.
• C. Consumers buy more of the good because they substitute it with more expensive alternatives and their real income increases.
• D. Consumers buy less of the good because they substitute it with more expensive alternatives and their real income increases.

Answer: (B)