Question

Suppose that the equilibrium price of greeting cards declined at the same time the equilibrium quantity of greeting cards increased. Which one of the following would most likely be responsible? a. A decrease in the price of paper used to make greeting cards b. A decrease in the demand for greeting cards c. A decrease in supply and an increase in demand for greeting cards d. An effective advertising campaign by the greeting card industry

Answer 1

Answer:

The answer is: A) A decrease in the price of paper used to make greeting cards.

Explanation:

In normal market conditions, an increase in the equilibrium quantity of greeting cards means that the quantity demanded and the quantity supplied of greetings cards increased. Usually an increase in the quantity supplied will result in an increase of the price of the good or service. But on this specific case something else made the price of the cards decrease. The only one of the four possible options that can explain an external cause for a decrease in the price of greetings cards, is a decrease in the price of paper used to manufacture them.