Falling prices for a product
A) create incentives for consumers to buy more, switching from more expensive substitutes.
B) eliminate surpluses.
C) create incentives for businesses to produce less.
D) decrease quantity supplied of the product.
E) do all of the above.

Question

Quizplus · Accepted Answer

Falling prices for a product incentivize consumers to buy more due to lower costs compared to substitutes (A), help eliminate surpluses by increasing demand (B), lead businesses to produce less due to lower profit margins (C), and decrease the quantity supplied as producers adjust to market conditions (D). Thus, all of the statements are correct outcomes of falling prices.

Falling Prices for a Product