A new game system was very popular during the holiday season, but, as is the case with many toy fads, sales have dropped off significantly in the following months. A surplus of the systems now line the shelves of retailers across the country. In the absence of government intervention, what is likely to occur?(1 point)

Question

Responses

The low price brought about by a decrease in demand will incentivize producers to decrease the quantity of game systems supplied to the market.
The low price brought about by a decrease in demand will incentivize producers to decrease the quantity of game systems supplied to the market.

The high price brought about by an increase in demand will incentivize producers to decrease the quantity of game systems supplied to the market.
The high price brought about by an increase in demand will incentivize producers to decrease the quantity of game systems supplied to the market.

The low price brought about by a decrease in demand will incentivize producers to increase the quantity of game systems supplied to the market.
The low price brought about by a decrease in demand will incentivize producers to increase the quantity of game systems supplied to the market.

The high price brought about by an increase in demand will incentivize producers to increase the quantity of game systems supplied to the market.

Answer 1

The correct response is:

The low price brought about by a decrease in demand will incentivize producers to decrease the quantity of game systems supplied to the market.

As demand decreases and prices fall due to the surplus of game systems, producers are likely to respond by reducing the quantity they supply to the market to avoid further losses.