Question

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

A. both supply and demand have decreased.

B. supply has increased but demand has decreased

C. both supply and demand have increased

D. demand has increased but supply has decreased.

Answer 1

C. both supply and demand have increased.