In the market for coffee, holding price and all other determinants of demand constant, how does an increase in the number of consumers affect the demand curve?

• A. Quantity demanded increases, so the demand curve shifts to the left.
• B. There is movement along the demand curve, but the demand curve does not shift.
• C. Demand decreases; the demand curve shifts to the left.
• D. Demand increases; the demand curve shifts to the right.

Answer: (D)

Verified step by step guidance

1. Understand the difference between a movement along the demand curve and a shift of the demand curve: A movement along the demand curve occurs when the price changes, affecting quantity demanded. A shift of the demand curve happens when a non-price determinant of demand changes, altering demand at every price level.
2. Identify the determinant of demand in this problem: The number of consumers is a non-price determinant of demand. An increase in the number of consumers means more buyers in the market.
3. Analyze the effect of an increase in the number of consumers: More consumers generally increase the total quantity demanded at every price, because more people want to buy the good.
4. Translate this effect into the demand curve movement: Since the increase in consumers changes demand at all prices, the entire demand curve shifts rather than causing movement along the curve.
5. Determine the direction of the shift: An increase in demand shifts the demand curve to the right, indicating a higher quantity demanded at each price.