In year 1 the price of good X is $10 and 100 units are bought and sold. In year 2 the price of good X is $13 and 230 units are bought and sold. What of the following could explain this?
A)The supply of good X was higher in year 2 than in year 1 and the demand for good X was the same in year 2 as in year 1.
B)The demand for good X was higher in year 2 than in year 1 and the supply of good X was the same in year 2 as in year 1.
C)Both the demand for, and supply of, good X were lower in year 2 than in year 1.
D)The demand for X was lower in year 2 than in year 1 and the supply of good X was the same in year 2 as in year 1.

Question

Quizplus · Accepted Answer

The increase in both price and quantity suggests an increase in demand. If there was a decrease in supply, the price would have increased even more. Therefore, option B is the best explanation.

In Year 1 the Price of Good X Is $10