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 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 high price brought about by an increase 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.

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 low price brought about by a decrease 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 decreased, prices are likely to fall, leading producers to reduce the quantity of dolls they supply because it may no longer be profitable to produce as many at the lower price.