Question
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A shift to the right of the demand curve, ceteris paribus, will result in... a) lower prices and lower quantity. b) higher prices and lower quantity. c) lower prices and higher quantity. d) higher prices and higher quantity.

Ask by Wade Barber. in the United States
Feb 24,2025

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Answer

A shift to the right of the demand curve results in higher prices and higher quantity.

Solution

When the demand curve shifts to the right, it means that at every price level, consumers are now willing to buy a larger quantity than before. With a constant supply (ceteris paribus), this increased demand leads to a new equilibrium where both the price and the quantity are higher. Thus, the correct answer is: d) higher prices and higher quantity.

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Bonus Knowledge

When the demand curve shifts to the right, it indicates an increase in demand for a product or service. This higher demand, while assuming that supply remains constant (ceteris paribus), typically drives prices up as consumers are willing to pay more for the available quantity. The result? You guessed it! Higher prices and higher quantity sold, making option (d) the correct answer. This concept of demand shifting can be observed in various everyday scenarios. For instance, during the holiday season, demand for certain products—like toys—can increase dramatically. Retailers frequently adjust their prices in response to this shift, often raising them to capitalize on the heightened interest, which ultimately leads to greater sales quantities as well. It's economics at play in real life!

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