Questions: Two months ago, the Maryville Shirt company sold 2,000 shirts at 30 per shirt. Last month the company raised its price to 35 per shirt and sold 3,000 shirts. Evidently the company experienced a(n)

Two months ago, the Maryville Shirt company sold 2,000 shirts at 30 per shirt. Last month the company raised its price to 35 per shirt and sold 3,000 shirts. Evidently the company experienced a(n)
Transcript text: Two months ago, the Maryville Shirt company sold 2,000 shirts at $\$ 30$ per shirt. Last month the company raised its price to $\$ 35$ per shirt and sold 3,000 shirts. Evidently the company experienced a(n) Multiple Choice decrease in demand. increase in demand. decrease in supply.
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Solution

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The answer is: increase in demand.

Explanation for each option:

  1. Decrease in demand: This option is incorrect. A decrease in demand would mean that fewer shirts were sold after the price increase. However, the company sold more shirts (3,000) at a higher price ($35) compared to the previous month (2,000 shirts at $30).

  2. Increase in demand: This option is correct. An increase in demand is indicated by the fact that the company sold more shirts (3,000) at a higher price ($35) than it did at a lower price ($30). This suggests that the demand for the shirts increased despite the price hike.

  3. Decrease in supply: This option is incorrect. A decrease in supply would typically result in higher prices and lower quantities sold, not an increase in the number of shirts sold. The scenario described shows an increase in the quantity sold, which does not align with a decrease in supply.

In summary, the correct interpretation of the given scenario is that the Maryville Shirt company experienced an increase in demand.

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