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In our case government introduces a $500 grant that can only be used on installation of rainwater tanks. It is offered as a direct subsidy to the consumer and though it does not increase consumers income or decreases the price of a product “Rainwater tank” it DOES reduce the price paid by the consumer, thereby provides the incentive for more people to install the rainwater tanks, which in its turn increase the consumption and boost the demand for rainwater tanks in the market. An increase in demand for a product can also result from such events as an increase in consumer income, a decrease in the price of a complement good, or an increase in the price of a substitute good...
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