When people move to an area of the world that was previously unpopulated,we expect more consumers and more producers to spring up in that area.What would we expect to happen to the price and quantity in the markets where this happens?
A) The equilibrium price will go up and the equilibrium quantity will go up.
B) The equilibrium price will go down and equilibrium quantity will be indeterminate.
C) The equilibrium price will be indeterminate and equilibrium quantity will go up.
D) The equilibrium price will go up and equilibrium quantity will be indeterminate.
E) The equilibrium price will be indeterminate and equilibrium quantity will go down.

Question

Quizplus · Accepted Answer

When people move to a previously unpopulated area, the increase in consumers leads to higher demand, while the increase in producers leads to higher supply. The equilibrium quantity will go up due to both increased supply and demand. However, the effect on equilibrium price is indeterminate without knowing the relative changes in supply and demand.

When People Move to an Area of the World That