In a market for bread, improvements in the production of flour have led to an in increase in the bread supply. This shift has produced a temporary surplus of bread because the quantity supplied exceeds the quantity demanded. In a free market, this surplus will be eliminated because _____.(1 point)

Question

Responses

higher prices will incentivize consumers to purchase smaller quantities of bread
higher prices will incentivize consumers to purchase smaller quantities of bread

lower profits will incentivize consumers to purchase smaller quantities of bread
lower profits will incentivize consumers to purchase smaller quantities of bread

higher profits will incentivize consumers to purchase greater quantities of bread
higher profits will incentivize consumers to purchase greater quantities of bread

lower prices will incentivize consumers to purchase greater quantities of bread
lower prices will incentivize consumers to purchase greater quantities of bread

Answer 1

The correct response is:

lower prices will incentivize consumers to purchase greater quantities of bread.

In a free market, when there is a surplus (where quantity supplied exceeds quantity demanded), sellers will typically lower prices in order to sell their excess inventory. Lower prices make the bread more attractive to consumers, leading to an increase in the quantity demanded, which helps eliminate the surplus.