ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It is a good time for consumers tobuy as prices fall.
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It is a good time for producers toraise prices.
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It is time for producers to leave themarket.
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Prices are too high relative toconsumer demand.
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Detailed explanation-1: -give producers an incentive to produce more. An increase in the price of the goods increases the total revenue of the producers from selling each good in the market. It incentivizes the producers to produce more at a higher price to earn more revenue and gain higher profits.
Detailed explanation-2: -A tax system can provide incentives to individual consumers and producers. It is easy to come to agreement about what is a fair tax system once everyone understands the four standards (ability to pay, efficiency, simplicity, and benefits received).
Detailed explanation-3: -Price acts as an incentive to consumers and producers. Higher (lower) prices require consumers to give up more (fewer) resources to obtain goods. Consumers react to changing price incentives by altering their consumption choices or the quantity demanded of goods.
Detailed explanation-4: -Prices provide information by acting as signals to producers about whether it is a good time to enter or exit a market. Rising prices motivate producers to enter a market due to the expectation of profits, while falling prices motivate them to exit a market due to the possibility of losses.