Question

Suppose that, three years ago, the small town of Middling experienced a sudden doubling of the birth rate. Today, the birth rate returned to normal. Relative to before the doubling of the birth rate, choose the statement that best describes the effect of these events on the market for an hour of babysitting services in Middling today.
a. The demand curve has shifted left, resulting in a fall in the equilibrium price and quantity.
b. The demand curve has shifted right, resulting in a rise in the equilibrium price and quantity.
c. The demand curve has shifted left, resulting in a rise in the equilibrium price and quantity.
d. The demand curve has shifted right, resulting in a fall in the equilibrium price and quantity.

Answer 1

Answer: The demand curve has shifted right, resulting in a rise in the equilibrium price and quantity.

Explanation:

Based on the scenario the.has been discussed in the question, there'll be a rightward shift in demand curve, this simply means that the demand for babysitting service will increase and when this happens, the babysitters will increase their prices and also the equilibrium quantity will also increase as there is increase in birth rate.

Therefore, the correct option is option B i.e. The demand curve has shifted right, resulting in a rise in the equilibrium price and quantity.