Substitute Goods Price Effect

Steps:

• Public transport and cars are substitute goods, meaning consumers can choose one over the other.
• The price of public transport rises, making it more expensive relative to cars.
• A rise in the price of a substitute increases demand for the other good.
• Thus, demand for cars shifts rightward, increasing overall.

Why D is correct:

• By the cross-price elasticity of demand for substitutes, a price increase in one good raises demand for its substitute (positive cross-elasticity).

Why the others are wrong:

• A: Demand contracts with a price fall in the good itself, not a substitute's price rise.
• B: Demand extends via movement along the curve from the good's own price drop, not a substitute's price change.
• C: Same as B; extension applies to own-price effects, causing a shift here instead.

Final answer: D