Suppose that both the equilibrium price and the equilibrium quantity of mustard rise.The most consistent explanation for these observations is
A) a decrease in the demand for mustard with no change in supply.
B) a decrease in the supply of mustard with no change in demand.
C) a decrease in the demand for mustard and a decrease in the supply of mustard.
D) an increase in the demand for mustard with no change in supply.
E) an increase in the supply of mustard with no change in demand.

Question

Quizplus · Accepted Answer

If both equilibrium price and equilibrium quantity rise, it means that there is an increase in demand for mustard, which results in an increase in the price and the quantity supplied. If there was a decrease in supply, the price of mustard would increase, but the quantity supplied would decrease, causing a possible decrease in equilibrium quantity. Hence, an increase in demand with no change in supply is the most consistent explanation for the observations.

Suppose That Both the Equilibrium Price and the Equilibrium Quantity