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

If the price of good A has increased but the quantity exchanged has also increased, it indicates that there is an increase in demand for the good, as consumers are willing to pay more for it and are also buying more of it. This would lead to an increase in both price and quantity exchanged. Therefore, the likely explanation is that the demand for good A has increased.

Suppose We Observe an Increase in the Price of Good