Question

You notice that the price of butter rises and then falls. The best explanation for this is that __________.


demand for butter increased causing price to rise, which attracted other firms to enter the market causing supply to increase, which caused the price to go back down

demand for butter decreased causing price to rise, which attracted other firms to enter the market causing supply to increase, which caused the price to go back down

demand for butter increased causing price to rise, which induced other firms to exit the market causing supply to decrease, which caused the price to go back down

demand for butter increased causing price to rise, which attracted other firms to enter the market causing supply to decrease, which caused the price to go back down

Answer B

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