Shift in Demand Due to Substitutes

Steps:

• Online music acts as a substitute, reducing consumer preference for CDs.
• This causes the demand curve for CDs to shift leftward.
• Equilibrium price and quantity of CDs fall.
• Lower quantity sold leads to shop closures.

Why C is correct:

• C depicts a leftward demand shift, as substitutes decrease demand per the law of demand.

Why the others are wrong:

• A shows rightward supply shift, but no production change occurred.
• B shows rightward demand shift, contradicting reduced CD purchases.
• D shows leftward supply shift, but supply factors like costs are unaffected.

Final answer: C