Here's what we know about last year's weekly demand for 2-night DVD rentals in the Village of Harmony: When P = $3, Qd = 100; at P = $5, Qd = 75; and when P = $7, Qd = 50. This year the village population has increased by 25%. What impact is this most likely to have?

Question

Quizplus · Accepted Answer

The increase in population implies an increase in the number of potential customers, which will lead to a shift to the right in the market demand curve. This means that at any given price, the quantity demanded for DVD rentals in the Village of Harmony will increase. Therefore, the most likely outcome is an increase in the market demand for DVD rentals. Option A is incorrect because we do not have enough information to conclude that the increase in population will result in an increase in each individual's demand. Option B is incorrect because the information suggests a shift to the right in the market demand curve rather than a leftward shift of individual demand curves. Option C is incorrect because the market demand curve is shifting to the right, not to the left.

Here's What We Know About Last Year's Weekly Demand for 2-Night