Suppose We Observe an Increase in the Price of Good

question 121

Multiple Choice

Suppose we observe an increase in the price of good A and an increase in the quantity of good A exchanged.Which of the following is a likely explanation?

• A)The "law of demand" is violated.
• B)The "law of supply" is violated.
• C)The supply of good A has increased.
• D)There is an excess supply of good A.
• E)The demand for good A has increased.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, used in statistics to quantify the variance from the mean.

Bullwhip Effect

The phenomenon where variations in demand at the retail level cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer, and raw material supplier levels.

Shortage Gaming

A strategy used in supply chain management where participants may exaggerate their needs to avoid stockouts, often leading to inefficiencies or distortions in supply chains.

Bullwhip Effect

A phenomenon in supply chain management where small fluctuations in demand at the retail level cause progressively larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.