A new game system was very popular during the holiday season, but, as in the case with many toy fads, sales have dropped off significantly in the following months. A surplus of the systems now line the shelves of retailers across the country. In the absence of government intervention, what is likely to occur?
-the low price brought by a decrease in demand will incentivize producers to increase the quantity of game systems supplied to the market
-the low price brought by a decrease in demand will incentivize producers to decrease the quantity of game systems supplied to the market
the low price brought by a decrease in demand will incentivize producers to increase the quantity of game systems supplied to the market
-the high price brought by a decrease in demand will incentivize producers to increase the quantity of game systems supplied to the market
-the high price brought by a decrease in demand will incentivize producers to decrease the quantity of game systems supplied to the market
The low price brought by a decrease in demand will incentivize producers to decrease the quantity of game systems supplied to the market.
In the absence of government intervention, the low price brought by a decrease in demand will likely incentivize producers to decrease the quantity of game systems supplied to the market. When demand decreases and retailers are left with a surplus of game systems, they will typically lower the prices in order to encourage consumers to purchase the surplus stock. As a result, producers will respond by reducing the quantity of game systems supplied, as it becomes less profitable for them to continue producing at the same quantity.
In this scenario, the decrease in demand for the game systems leads to a surplus of inventory on the shelves of retailers. In the absence of government intervention, the low price brought by a decrease in demand will incentivize producers to decrease the quantity of game systems supplied to the market.
To understand why, we need to consider the basic law of supply and demand. When demand for a product decreases, there is an excess supply, leading to lower prices. Lower prices mean less profitability for the producers, and as a result, they would be motivated to reduce the quantity of game systems they supply to the market. By reducing the supply, they can help balance out the market and potentially increase prices.
Therefore, option 2: "the low price brought by a decrease in demand will incentivize producers to decrease the quantity of game systems supplied to the market" is the most likely outcome in this situation.