Which one of the following could account for an increase in the market clearing price of iPads?
A)a decrease in demand for iPads
B)an increase in supply of iPads
C)an increase in supply along with a decrease in demand
D)an increase in demand along with a decrease in supply

Question

Quizplus · Accepted Answer

An increase in demand along with a decrease in supply would result in a shortage of iPads in the market, causing the market clearing price to increase. Option A (decrease in demand) would result in a decrease in the market price of iPads. Option B (increase in supply) would lead to a decrease in the market price of iPads. Option C (increase in supply and decrease in demand) would depend on which effect is stronger. If supply increased more than demand decreased, the price would go down. If demand decreased more than the supply increased, the price would go up.

Which One of the Following Could Account for an Increase