Suppose that the number of buyers in a market increases and a technological advancement occurs. What would we expect to happen in the market?

Question

Quizplus · Accepted Answer

An increase in buyers in the market will shift the demand curve to the right, leading to a higher equilibrium quantity. The technological advancement will shift the supply curve to the right as well, leading to an increase in equilibrium quantity. The impact on equilibrium price is ambiguous because the increase in demand tends to drive prices up, while the increase in supply tends to drive prices down, resulting in an uncertain net effect. Thus, the equilibrium quantity will increase, and the impact on equilibrium price will be ambiguous.

Suppose That the Number of Buyers in a Market Increases