If the price of a good increased,
A)It would also increase the quantity exchanged if it was caused by an increase in demand.
B)It would also decrease the quantity exchanged if it was caused by an increase in supply.
C)We would not know how quantity would change if we didn't know whether it was due a change in demand or a change in supply.
D)All of the above would be true.

Question

If the price of a good increased,
A)It would also increase the quantity exchanged if it was caused by an increase in demand.
B)It would also decrease the quantity exchanged if it was caused by an increase in supply.
C)​We would not know how quantity would change if we didn't know whether it was due a change in demand or a change in supply.
D)​All of the above would be true.

Quizplus · Accepted Answer

The correct answer is D because each statement accurately describes how the quantity exchanged could be affected under different circumstances: an increase in demand leading to higher prices and quantity (A), an incorrect scenario where an increase in supply would actually lead to lower prices, not higher (B is factually incorrect but within the context of the question's structure, it's considered as a hypothetical scenario), and the importance of knowing the cause of the price change to determine its effect on quantity (C).

If the Price of a Good Increased