Which statements are TRUE?
I. A high price for a good encourages consumers to economize on its use, seeking out alternatives.
II. Rising prices give firms the incentive to bring more goods to the market.
III. Firms that experience rising input prices will seek out substitute inputs and develop production technologies to conserve on the costly input.
A) I only
B) I and II
C) II only
D) I, II, and III

Question

Quizplus · Accepted Answer

All three statements are true. A high price for a good will lead consumers to look for alternatives or ways to economize, while firms will be incentivized to bring more goods to the market as prices rise. Rising input prices will also motivate firms to seek out substitute inputs and develop ways to conserve on costly inputs, in order to maintain profits.

Which Statements Are TRUE