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O Levels Economics (2281)•2281/12/M/J/22
Question 6 from 2281/12/M/J/22

Explanation

Rightward Demand Shift from Complement Price Change

Steps:

  • A rightward demand curve shift means increased demand at every price, caused by non-price factors like related goods' prices.
  • Complements are goods used together; a price drop in one boosts demand for the other.
  • Substitutes compete; a price drop in one reduces demand for the alternative.
  • The good's own price change causes movement along the curve, not a shift.

Why B is correct:

  • A decrease in a complement good's price lowers the total cost of joint consumption, increasing demand for the original good per the law of demand for related goods.

Why the others are wrong:

  • A: Decreased income reduces purchasing power for normal goods, shifting demand left.
  • C: Decreased substitute price makes the alternative more attractive, shifting demand left.
  • D: Decreased price of the good causes a movement down along the existing demand curve.

Final answer: B

Topic: Demand

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