Suppose that, last year, the price of peanuts fell and the quantity sold increased. Use supply and demand analysis to explain how these changes could have occurred
What will be an ideal response?
There are two possible causes of the drop in price: a decrease in demand or an increase in supply. If demand decreases, equilibrium quantity also falls. Thus, this could not be the cause of the changes in the peanut market. On the other hand, an increase in supply lowers equilibrium price while increasing the equilibrium quantity sold. Therefore, the supply of peanuts must have increased.
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Indicate whether the statement is true or false
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A) growth rate of capital B) growth rate of output per worker C) level of consumption per worker D) level of capital per worker