The price of iPhones™ is falling. In a free-market economic system where everything else is equal, the most likely explanation is:
A) suppliers are not producing enough product.
B) sellers cannot keep up with market demand.
C) the government determined that the product was not worth the price tag that the producer was asking.
D) the product has competition at the equilibrium price.

Question

Quizplus · Accepted Answer

When a product has competition at the equilibrium price, the demand for the product decreases as consumers have more options to choose from. This results in a surplus of iPhones™ in the market, which drives down the price. Therefore, D is the most likely explanation for the falling prices of iPhones™.

The Price of IPhones™ Is Falling