Answer : C) Price of the substitute good

Lets say for an instance, We have Demand for Cool drinks in summer season.
Lets take Main good as Tender coconut Costs Rs.30
substitue as Bottled cooldrink costs Rs.15

Now,Even though the Tender coconut is healthier and natural ,the price of the Substitute good is lesser and creates more demand!

Law of demand states : If Price of a commodity decreases, then demand Increases.

Factors that cause a change in demand

The demand for a product or service refers to the quantity of that product or service that consumers are willing and able to purchase at a given price during a specific period. Several factors can influence the demand for a good or service, including changes in consumer preferences, income levels, population, and prices of related goods. However, among these factors, the price of substitute goods has a significant impact on the demand for a particular good or service.

Explanation:

1. Price of substitute goods:
- A substitute good is a product or service that can be used as an alternative to another good or service.
- When the price of a substitute good increases, consumers are more likely to switch to the lower-priced good, resulting in an increase in demand for the lower-priced good.
- For example, if the price of coffee increases significantly, some consumers may switch to tea as a substitute. This shift in consumer behavior would lead to an increase in the demand for tea.
- On the other hand, if the price of a substitute good decreases, consumers may choose to switch from the given good to the substitute, causing a decrease in the demand for the given good.
- The price of substitute goods is an important factor in determining consumer choices and can have a significant impact on the overall demand for a particular product or service.

Other factors that influence demand:

2. Price of the given good:
- The price of the given good itself has a direct impact on demand. When the price of a good decreases, consumers may be more willing to purchase it, resulting in an increase in demand. Conversely, when the price of a good increases, demand is likely to decrease.

3. Price of inputs:
- The cost of inputs required to produce a good or service can impact its price, which in turn affects demand. If the price of inputs increases, the cost of production will increase, leading to a higher price for the final product and potentially lower demand.

4. An improvement in technology:
- Technological advancements can lead to the production of goods and services at lower costs, which can result in lower prices and an increase in demand. Improved technology can also lead to the development of new and innovative products, which can create new demand in the market.

Conclusion:

While several factors can influence the demand for a good or service, the price of substitute goods is a crucial factor that directly affects consumer choices and can significantly impact demand. As the price of substitute goods changes, consumers may switch their preferences, leading to changes in demand for the given good or service.