According to the Law of Demand,if a Firm Reduces the Price

question 14

Multiple Choice

According to the law of demand,if a firm reduces the price of its good:

• A)consumers in the market will demand more units of the good.
• B)some consumers will exit the market.
• C)consumers will demand fewer units than before the price cut.
• D)the quantity of goods produced and sold by the firm will decline.
• E)competing firms will increase prices.

---

Definitions:

Rational Expectations

An economic theory assuming individuals and firms use all available information to make forecasts and decisions, leading to outcomes that align with those expectations.

Expectations Theory

A theory in finance which suggests that the yields on long-term bonds will equal the average of short-term interest rates expected in the future, adjusted for a risk premium.

Rational Expectations

The theory suggesting that individuals form forecasts about the future based on all available information.

Critics

Individuals or groups that express disagreement or disapproval towards certain ideas, policies, or works, often seeking to present alternative viewpoints.