Double the Fun: Increase in Ice Cream Shops Means More Options!
What happens when the number of ice cream shops doubles and the price remains constant at $5?
a) The market supply curve of ice cream cones shifts to the right
b) The market supply curve of ice cream cones shifts to the left
c) The market supply curve of ice cream cones remains unchanged
The Answer is: a) The market supply curve of ice cream cones shifts to the right
When the number of ice cream shops doubles and the price remains constant at $5, the market supply curve of ice cream cones will shift to the right, indicating an increase in supply.
Imagine this: the delightful world of ice cream becomes even sweeter when the number of ice cream shops doubles in a town! With each shop selling ice cream cones at $5, the market supply curve of ice cream cones shifts to the right, opening up a world of possibilities for consumers.
Let's break it down further with an example. Initially, there are 10 ice cream shops in town, each offering ice cream cones for $5. The market supply curve represents the total quantity of ice cream cones available at different prices. But when the number of shops doubles to 20, the market supply curve shifts to the right.
What does this mean for ice cream lovers? More shops equate to a greater quantity of ice cream cones supplied at any given price point. For instance, at the original price of $5, there might have been 100 cones available with 10 shops. However, with 20 shops, the quantity supplied could double to 200 cones at the same price!
Ultimately, doubling the number of ice cream shops leads to a shift in the market supply curve to the right, resulting in more options and potentially lower prices for consumers. Who wouldn't want more ice cream choices at their disposal?