Falling oil prices would significantly lower the cost of production for many goods. Producers of plastic kayaks, for instance, would be able to produce larger quantities of their product given the decrease in input costs. Which of the following illustrates how consumers respond to the price incentive brought about by the subsequent increase in supply?(1 point)

Question

Responses

Rising prices lead consumers to purchase fewer kayaks.
Rising prices lead consumers to purchase fewer kayaks.

Falling prices lead consumers to purchase more kayaks.
Falling prices lead consumers to purchase more kayaks.

Falling prices lead consumers to purchase fewer kayaks.
Falling prices lead consumers to purchase fewer kayaks.

Rising prices lead consumers to purchase more kayaks.

Answer 1

The correct response illustrating how consumers respond to the price incentive brought about by the subsequent increase in supply is:

Falling prices lead consumers to purchase more kayaks.

This response reflects the concept of the law of demand, which states that as prices decrease, the quantity demanded by consumers increases, assuming other factors remain constant.