If the number of retirees increases, what happens to the market for bus tours?http://postimage.org/image/ktcnnh61f
As the number of retirees increases, there is a change in the demand of bus tours as explained earlier. This changes the demand curve though the supply curve is likely to stay the same. As a result there is a change in the equilibrium price and it would increase.
This is illustrated below:
The original demand curve is in black, the demand curve when the number of retirees rises is in green. The supply curve is shown in red. Notice the change in the equilibrium price that correspond to the price where the black and green dots have been shown. Keep in mind that the demand and supply curves are conventionally drawn with quantity depicted on the y-axis and price on the x-axis.
In answering this, we will assume that retirees, with more time on their hands, are likely to want to take bus tours. If that assumption is correct, the equilibrium price and the equilibrium quantity exchanged of bus tours will rise.
One of the non-price determinants of demand is the number of buyers in a market. If retirees are likely buyers for bus tours, then an increase in their numbers will mean that there are more buyers of those tours. More buyers means an increase in demand (all other things being equal).
An increase in demand can be graphed by moving the demand curve to the right. When you draw in the second demand curve, you will see that the new equilibrium (where it intersects with the supply curve) will be at a higher price and quantity than it was previously.