Question

Consider the market for sweatshirts. In January, 2017, the equilibrium price was $27 and equilibium quantity was 140 shirts. In January, 2019, the equilibrium price was still $27 but equilibrium quantity had increased to 175 shirts. Which of the following is the best possible explanation for this change in market equilibrium? People were predicting the price of sweatshirts would rise due to a tax on sweatshirts imported into the country. There was an improvement in technology to produce sweatshirts, and movie stars where seen wearing sweatshirts which set off a trend. There was a reduction in the price of cotton used to make sweatshirts.

Answer 1

"B"

A smilar price and increased quantity of goods are possible when there is an improvement in technology to produce sweatshirts and movie stars were seen wearing those shirts (this will increase the demand) as both the demand and supply increase by the same amount the output will increase the price will remain the same.