Suppose we observe that both the equilibrium price of digital cameras and the equilibrium quantity of digital cameras have increased. Which of the following events could be responsible for this?

Question

Quizplus · Accepted Answer

If consumers' preferences changed in favor of digital cameras, then there would be an increase in demand for digital cameras. This would cause both the equilibrium price and quantity of digital cameras to increase. Option A could also be a possible explanation as technological advances in production can lead to a decrease in production costs and an increase in supply, but this option is not as clear-cut as option D. Option B and C are unlikely to cause an increase in both equilibrium price and quantity of digital cameras.

Suppose We Observe That Both the Equilibrium Price of Digital