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19 May, 21:40

Assume that at the current market price of $5 per unit of a good, you are willing and able to buy 20 units. Last year at a price of $4 per unit, you purchased 20 units. What has most likely happened over the last year? Supply has decreased. Quantity supplied has decreased. Demand has decreased. Supply has increased. Demand has increased.

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  1. 19 May, 22:07
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    The correct answer is the demand has increased.

    Explanation:

    At the market price of $5/unit, the quantity demanded is 20 units.

    Last year at the price level of $4, the quantity demanded was 20 units.

    We see that even though the price has increased the quantity demanded is the same. This indicates that the demand has increased.

    When there is an increase in the demand for a commodity, the demand curve moves to the right. This upward or rightward shift in the demand curve will cause the price of the commodity to increase. Though the quantity demanded will be the same.
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