Question

Suppose we observe that the equilibrium quantity of a particular good has increased significantly over the past 5 years, with virtually no change in the equilibrium price. The most likely explanation is that, over the past 5 years:

1.supply has decreased but demand has increased.

2.both supply and demand have increased.

3.both supply and demand have decreased.

4.supply has increased but demand has decreased.

Answer 1

2. both supply and demand have increased.