If we observe both an increase in the price of flour and in the number of units sold, this could be explained by:
A)an increase in the demand for flour.
B)a decrease in the demand for flour.
C)a decrease in the supply of flour.
D)an increase in the supply of flour.

Question

If we observe both an increase in the price of flour and in the number of units sold, this could be explained by:
A)​an increase in the demand for flour.
B)​a decrease in the demand for flour.
C)​a decrease in the supply of flour.
D)​an increase in the supply of flour.

Quizplus · Accepted Answer

An increase in both price and units sold is indicative of an increase in demand. If supply had decreased, we would expect to see a decrease in the number of units sold as well.

If We Observe Both an Increase in the Price of Flour