An increase in the demand for butter reduces the demand for margarine, this type of demand is called

This type of demand is called a "competitive demand". Competitive demand occurs when two or more products or goods can be used as substitutes for each other. In the given scenario, butter and margarine are substitutes for each other. As the demand for butter increases, consumers are likely to switch to butter from margarine, which will decrease the demand for margarine. This shows how the demand for one product can affect the demand for another related product.