Question
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)
Responses
Falling prices lead consumers to purchase fewer kayaks.
Falling prices lead consumers to purchase fewer kayaks.
Rising prices lead consumers to purchase more kayaks.
Rising prices lead consumers to purchase more kayaks.
Falling prices lead consumers to purchase more kayaks.
Falling prices lead consumers to purchase more kayaks.
Rising prices lead consumers to purchase fewer kayaks.
Falling prices lead consumers to purchase more kayaks.
Forest fires have inflicted significant damage to a region, leaving several paper mills destroyed in their wake. As such, the supply of paper in the region has been significantly reduced. Without government intervention, which of the following is likely to occur?(1 point)
Responses
A surplus of paper will persist unless government action is taken to decrease paper production in the region.
A surplus of paper will persist unless government action is taken to decrease paper production in the region.
A temporary surplus of paper will be remedied as consumers bid down prices, and paper production decreases due to the loss of profits associated with falling prices.
A temporary surplus of paper will be remedied as consumers bid down prices, and paper production decreases due to the loss of profits associated with falling prices.
A temporary shortage of paper will be remedied as consumers bid up prices, and paper production increases due to the rising profits associated with higher prices.
A temporary shortage of paper will be remedied as consumers bid up prices, and paper production increases due to the rising profits associated with higher prices.
A shortage of paper will persist indefinitely unless government action is taken to increase paper production in the region.