Demand Shift Causes Price Increase

Steps:

• Identify factors affecting price: shifts in supply or demand curves.
• Price increase occurs if demand shifts right (more demand at each price) or supply shifts left (less supply).
• Evaluate each choice for its effect on demand or supply.
• Select the option that shifts demand right.

Why B is correct:

• Rising consumer incomes increase demand for normal goods (law of demand), shifting the demand curve right and raising equilibrium price.

Why the others are wrong:

• A: Falling raw material costs shifts supply right, increasing supply and lowering price.
• C: Rising complement price decreases demand for the good, shifting demand left and lowering price.
• D: Falling substitute price decreases demand for the good, shifting demand left and lowering price.

Final answer: B