You notice that the price of butter falls and then rises. The best explanation for this is that:
A. demand for butter increased causing price to fall, which attracted other firms to enter the market causing supply to increase, which caused the price to go back up.
B. demand for butter decreased causing price to fall, which attracted other firms to enter the market causing supply to increase, which caused the price to go back up.
C. demand for butter decreased causing price to fall, which induced other firms to exit the market causing supply to decrease, which caused the price to go back up.
D. demand for butter decreased causing price to fall, which attracted other firms to enter the market causing supply to decrease, which caused the price to go back up.
Answer: C
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