Which of the following best describes what happens to market equilibrium when the majority of consumers enter the market and it reaches its full market potential?

• A. The market demand curve shifts to the right, leading to a higher equilibrium price and quantity.
• B. The equilibrium price remains unchanged, but the equilibrium quantity decreases.
• C. The market supply curve shifts to the left, resulting in a lower equilibrium price.
• D. Both the market demand and supply curves shift to the left, causing a decrease in equilibrium quantity.

Answer: (A)

Verified step by step guidance

1. Understand that when the majority of consumers enter the market, the overall demand for the product increases because more people want to buy it.
2. Represent this increase in demand as a rightward shift of the market demand curve, which means at every price level, the quantity demanded is higher.
3. Recall that the market supply curve remains unchanged in this scenario because the problem does not mention any change in producers' behavior or costs.
4. Determine the new equilibrium by finding the intersection of the original supply curve and the new, shifted demand curve. This new intersection point will have a higher equilibrium price and quantity compared to the original equilibrium.
5. Conclude that an increase in the number of consumers leads to a rightward shift in demand, which raises both the equilibrium price and quantity in the market.