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

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The question states: 'A student says “Supply of ice cream increases with increasing population”. How will you show this change in the market diagram?'

Since the only provided option is: d. Entire supply curve will shift to the right-hand side.

Option d analysis: An increase in population increases the market size and the number of potential buyers, which typically raises overall market demand rather than supply. However, the statement in the question specifies 'supply of ice cream increases with increasing population', which is a bit unconventional, because population growth more directly affects demand. If we interpret population increase as a factor that enables higher production capacity or more producers entering the market (e.g., more workers, more investment), this could lead to an increase in supply as well, and in diagram terms, a rightward shift of the entire supply curve would reflect a higher quantity supplied at every price.

But in standard economic diagrams, population growth is usually linked to demand growth (rightward shift of the demand curve), not supply. If the intention is to represent a supply increase due to factors like improved technology, lower costs, or more producers, the appropriate diagrammatic change would still be a rightward shift of the supply curve. Therefore, option d (entire supply curve shifts to the right) correctly captures a rightward shift indicating an increase in supply, assuming the underlying cause is increased production capacity or more suppliers.

Reasoning about potential alternative options (not provided):
- If there were an option stating 'supply increases, causing a rightward shift in the supply curve' that would be correct in standard terms for a supply increase.
- An option stating 'the supply curve remains unchanged' would be incorrect when supply actually increases.
- An option stating 'a movement along the supply curve' would be incorrect because supply increase is a shift of the curve, not movement along it.

In summary, within the context of the provided option, describing the change as the entire supply curve shifting to the right appropriately reflects an increase in supply in the market diagram, given the assumption that population growth translates into higher production/supply capacity rather than merely higher demand. Note: The classic interpretation would map population growth to a shift in demand; the question appears to conflate supply with demand, so the selected option aligns with a rightward supply shift as stated.

MCD2090 Macroeconomics - Trimester 2 - 2025

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

View Explanation

Log in for full answers

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