Suppose we observe an increase in the price of good A and an increase in the quantity of good A exchanged.Which of the following is a likely explanation?

Question

Quizplus · Accepted Answer

An increase in both price and quantity exchanged suggests that there has been an increase in demand for good A. According to the law of demand, an increase in price would lead to a decrease in quantity demanded, so the only way both price and quantity could increase is if demand increased.

Suppose We Observe an Increase in the Price of Good