Practicing Success
_ _ _ _ _ _ _causes a movement along the Demand Curve. |
Rise in income of consumer Expected rise in future prices Fall in price of a good Fall in price of substitute good |
Fall in price of a good |
The correct answer is option (3) : Fall in price of a good A movement along the demand curve is typically caused by changes in the price of a good. When the price of a good decreases, holding other factors constant, consumers typically respond by demanding more of that good. This movement along the demand curve reflects the change in quantity demanded due to the change in price. The other options represent factors that can shift the entire demand curve rather than causing a movement along it: (1) A rise in income of consumers can shift the demand curve, especially for normal and inferior goods. (2) An expected rise in future prices may lead to increased current demand, shifting the demand curve to the right. (4) A fall in the price of a substitute good can shift the demand curve for the original good, as consumers may switch their preference from the more expensive substitute to the now cheaper original good. |