Question

does the correlation in the situation illustrate causation? there is a negative correlation between the price of a model of car and the number of cars of that model sold. a) no, an increase in the price of a car likely does not cause the number of cars sold to decrease. b) no, a decrease in the number of cars sold likely does not cause an increase in the price of a car. c) yes, an increase in the price of a car likely causes the number of cars sold to decrease. d) yes, a decrease in the number of cars sold likely causes an increase in the price of a car.

Explanation:

Correlation does not always imply causation. But in economics (a sub - field of Business), according to the law of demand, when the price of a good (in this case, a car) increases, the quantity demanded (number of cars sold) decreases, assuming other factors remain constant. So, an increase in car price likely causes a decrease in the number of cars sold.

Answer:

D. Yes, a decrease in the number of cars sold likely causes an increase in the price of a car.