A student says “Supply of ice cream decreases with decreasing population”. How will you show this change in the market diagram?

Question

BlackTom AI · Accepted Answer

The question asks how to show the effect of a change in population on the market for ice cream in a diagram.
Option analysis:
- The provided option states: 'b. Entire supply curve will shift to the left-hand side.'
  This is not correct because population size primarily affects demand, not supply. A decrease in population reduces the number of potential buyers, which shifts the demand curve to the left, not the supply curve. The supply curve would shift left only if something directly affected producers’ willingness or ability to supply ice cream (e.g., higher costs, new regulations, or a change in technology), not a demographic change.
- Why the correct depiction would be a shift in the demand curve: with fewer people, the quantity demanded at every price decreases, so the demand curve should move leftward. In the standard supply-and-demand diagram, this is shown as a parallel shift of the demand curve to the left, while the supply curve remains in place.
- Why this option misleads: attributing the shift to supply conflates two distinct market sides. It ignores the core principle that population changes primarily affect the number of buyers (demand), not the producers' ability or incentive to supply.
- If other options were present, we would evaluate them similarly by checking whether they reflect a demand-side shift (left for a population decrease, right for population increase) or a supply-side shift (left or right) due to factors like costs, technology, or regulations. In this case, the isolated statement about supply is inconsistent with the underlying economics of population-driven demand changes.

MCD2090 Macroeconomics - Trimester 2 - 2025

A student says “Supply of ice cream decreases with decreasing population”. How will you show this change in the market diagram?

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MCD2090 Macroeconomics - Trimester 2 - 2025

A student says “Supply of ice cream decreases with decreasing population”. How will you show this change in the market diagram?

View Explanation

Log in for full answers

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