A factory closes, laying off hundreds of workers, and consumer spending in the town falls. What factor is affecting demand? consumer expectation consumer taste income substitutes

## Step 1<br />The problem presents a situation where a factory closes, leading to a decrease in consumer spending in the town. The question asks us to identify the factor that is affecting demand.<br /><br />## Step 2<br />The options provided are consumer expectation, consumer taste, income, and substitutes. We need to analyze each option in relation to the given situation.<br /><br />## Step 3<br />Consumer expectation refers to the future expectations of consumers about the market. This doesn't seem to be the primary factor affecting demand in this case.<br /><br />## Step 4<br />Consumer taste refers to the preferences of consumers. This also doesn't seem to be the primary factor affecting demand in this case.<br /><br />## Step 5<br />Income refers to the earnings of consumers. In this case, the factory closure leads to a decrease in income for the workers who were laid off. This decrease in income would lead to a decrease in consumer spending, which is the situation described in the problem.<br /><br />## Step 6<br />Substitutes refer to other goods that can replace a particular good. This doesn't seem to be the primary factor affecting demand in this case.