A market demand curve is likely to shift to the right when:
A) average income falls.
B) prices fall.
C) prices rise.
D) population increases.
E) new firms enter the market.

Question

Quizplus · Accepted Answer

When population increases, there will be more consumers in the market, which will increase demand and shift the market demand curve to the right. A fall in average income (A) will decrease demand for normal goods, leading to a leftward shift in the demand curve. A fall in prices (B) will increase the quantity demanded at each price, but it will not shift the demand curve. Prices rising (C) will decrease quantity demanded, leading to a leftward shift in the demand curve. New firms entering the market (E) will increase supply, but it will not shift the demand curve.

A Market Demand Curve Is Likely to Shift to the Right