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Which of the following changes would cause a leftward shift (a decrease) in the demand curve for a normal good?
AAn increase in the number of buyers
BA fall in the price of a complement
CA fall in the price of a substitute good
DA change in tastes favouring the good
Answer & Solution
Correct answer: C. A fall in the price of a substitute good
1. A decrease in demand shifts the curve to the left, meaning less is demanded at each price.
2. A fall in the price of a substitute makes buyers switch to the substitute, lowering demand for this good.
3. A fall in the price of a complement, more buyers, or favourable tastes all increase demand (rightward).
4. So only the fall in the price of a substitute causes a leftward shift.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit I "Law of Demand and Elasticity of Demand", p.15_
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