In year 1 the average price of X is $10, and in year 2 the average price of X is $23. Still, consumers buy more units of X in year 2 than in year 1. It follows that

Question

Marquis Ali

Business

30 August, 05:24

In year 1 the average price of X is $10, and in year 2 the average price of X is $23. Still, consumers buy more units of X in year 2 than in year 1. It follows that

+5

Answers (1)

Know the Answer?

Ariella · Answer 1

Demand for good x could be higher in year 2 than year 1

Income may have been higher in year 2 than year 1

Explanation:

In the given scenario there was an average price of product as $10. To calculate average cost it is total sales revenue divided by number of units sold.

In year 2 the average price is $23. This means that for each unit sold in year 2 the price was $23 an increase of $13 from year 1.

For this to have happened first there could have been higher income of the consumer in year 2 and they will have more to spend on the product at a higher price.

There will also need to be an increase in the demand for the good this will increase units sold and also price will go up.