In year 1 the price of good X is $10 and 100 units are bought and sold.In year 2 the price of good X is $13 and 230 units are bought and sold.What can explain this?
A) The supply of good X was higher in year 2 than in year 1 and the demand for good X was the same in year 2 as in year 1.
B) The demand for good X was higher in year 2 than in year 1 and the supply of good X was the same in year 2 as in year 1.
C) Both the demand for,and supply of,good X were higher in year 2 than in year 1.
D) b or c
E) a,b,or c

Question

Quizplus · Accepted Answer

We cannot determine which specific factor (demand or supply) caused the change in price and quantity. Both options B and C are possible explanations for the observed change. Therefore, our best choice is D, which incorporates both possibilities.

In Year 1 the Price of Good X Is $10