Question

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.

Answer 1

The correct answer is option c.

Step-by-step explanation:

When people move to a previously unpopulated area, the quantity of both consumers as well producers will increase. This will create an increase in both the demand as well as the supply. Both the demand and the supply curve will move to the right.

This rightward shift in both the demand as well as supply curve will lead to an increase in equilibrium quantity. The change in equilibrium price will depend upon the extent of change in demand and supply.