A set of collectible dolls was very popular during the holiday season, but, as is the case with many toy fads, has dropped off significantly in the following months. A surplus of dolls now lines 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 dolls supplied to the market.
The low price brought about by a decrease in demand will incentivize producers to decrease the quantity of dolls supplied to the market.

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

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

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

As demand has dropped, the prices of the dolls will likely decrease due to the surplus. In response to lower prices and decreased demand, producers are likely to reduce the quantity of dolls they supply to the market to prevent losses.