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CSEET · Economic and Business Environment · Basics of Demand and Supply and Forms of Market Competition

A market demand curve is the horizontal summation of individual demand curves. Which of the following would, by itself, shift the market demand curve for a product to the right?

An increase in the number of buyers shifts the market demand curve to the right. Market demand is the sum of individual demands at each price, so more buyers means a larger quantity demanded at every price. Cost and technology changes affect supply, and own-price changes cause movements along the curve.

  1. AAn increase in the number of buyers in the marketCorrect
  2. BA rise in the cost of raw materials used by producers
  3. CA fall in the product's own price
  4. DAn improvement in production technology

Explanation

Market demand adds up the quantities demanded by all buyers at each price, so more buyers raise quantity at every price, shifting the curve right. Raw material cost and technology are supply-side factors. A fall in own price only moves along the curve.

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