ECONOMICS
MARKETS AND PRICES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
There will be a shortage.
|
|
|
There will be an incentive to change.
|
|
|
They are in disequilibrium.
|
|
|
There will be a surplus.
|
Detailed explanation-1: -As the price of a good goes up, consumers demand less of it and more supply enters the market. If the price is too high, the supply will be greater than demand, and producers will be stuck with the excess. Conversely, as the price of a good goes down, consumers demand more of it and less supply enters the market.
Detailed explanation-2: -Increased prices typically result in lower demand, and demand increases generally lead to increased supply. However, the supply of different products responds to demand differently, with some products’ demand being less sensitive to prices than others.
Detailed explanation-3: -If producers incorrectly set the price of their product too high a: Surplus will result and excess goods in inventory will signal to producers to lower their prices.
Detailed explanation-4: -The increase in price will cause the profits of producers to go up, motivating them to produce a greater quantity of the good. 3. As producers increase production, price will begin to fall, motivating consumers to purchase greater quantities of the good.