Suppose that in the clothing market,production costs have fallen,but the equilibrium price and quantity purchased have both increased.Based on this information we can conclude that:

A) the supply of clothing has grown faster than the demand for clothing.
B) demand for clothing has grown faster than the supply of clothing.
C) the supply of and demand for clothing have grown by the same proportion.
D) there is no way to determine what has happened to supply and demand with this information.

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Danielle Swango · Accepted Answer

Final Answer : B, Explanation :  When production costs fall, it becomes cheaper for suppliers to produce clothing which should increase supply. However, the fact that equilibrium price and quantity have both increased suggests that demand has grown faster than supply. Thus, we can conclude that demand for clothing has grown faster than the supply of clothing.

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