Final answer:
The introduction of a law requiring padded jackets for cycling would shift the demand curve for padded jackets to the right, indicating an increase in demand. This is graphically shown by a new demand curve D1 positioned to the right of the original one, with a higher quantity demanded at each price point.
Step-by-step explanation:
If the government were to introduce a new law that required people to wear padded jackets when cycling, this would lead to a shift in the demand curve for padded jackets. The original demand curve Do, which assumes ceteris paribus, would be affected because this new law changes a relevant economic factor.
Typically, a demand curve shows the relationship between the price of an item and the quantity demanded. Should there be an increase in demand due to the new law, we would see this entire demand curve shift to the right, similar to a case where a mountain bike becomes popular after winning a race. This rightward shift, which we could label D1, indicates that at each price point, more padded jackets are demanded than before, due to the legal requirement for cyclists to wear them.
Graphically, this would be represented by drawing a new demand curve to the right of the original curve. This constitutes an increase in demand. Conversely, if the demand for padded jackets were to decrease, the demand curve would shift to the left, labeled as D2, and this would represent a decrease in demand.