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A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices.
However, when the average price of cars increased throughout the 1990s, more cars were purchased. Which
of the following best explains the apparent conflict between theory and data?
a. The ceteris paribus assumption is valid.
b. It is likely that variables other than the price and quantity of cars demanded were
changing.
c. The theory is valid. However, the price and quantity data gathered by researchers was
clearly measured incorrectly.
d. The theory must be invalid.

Respuesta :

Answer:

b. It is likely that variables other than the price and quantity of cars demanded were

changing.

Explanation:

The law of demand states that the higher the price of a good, the lower the quantity demanded and the lower the price of a good, the higher the quantity demanded.

If price of cars was increasing and the quantity demanded also was increasing, it indicates other variables were changing. For example, if income was increasing at the time, the demand for cars would increase if cars are normal goods.

I hope my answer helps you

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