Demand Shift from Population Growth

Steps:

• Identify the equilibrium change: Point X to Y shows a rightward shift in the demand curve, increasing both price and quantity.
• Recall market forces: Equilibrium moves due to shifts in supply or demand curves, not movements along them.
• Analyze options: Evaluate which factor shifts demand rightward without affecting supply.
• Select best fit: Increase in households boosts demand for cookers, explaining the shift.

Why C is correct:

• Law of demand: An increase in number of households raises overall demand, shifting the demand curve right and creating a new equilibrium at higher price and quantity.

Why the others are wrong:

• A: A price fall causes movement along the demand curve to a lower quantity, not a new equilibrium.
• B: A tax increase shifts supply left, raising price but lowering quantity.
• D: Higher electricity prices shift supply left as costs rise, reducing quantity supplied.

Final answer: C